EFTA01097655

Deutsche Bank Markets Research VA United States HY Corporate Credit Date 13 January 2015 Energy Kathryn O'Connor Research Anent HY E&P Sector Update & 2015 Outlook Jaloci Research Associate Quarterly Updates for E&Ps under coverage including: In•Depth Relative Value Forecasts Sector Benchmarking Scenario Analysis E&P Universe Credit and Operational Metric Screen across 30 credits including: Results and Ranking Snapshot Scatter Plots by Metric Liquidity Analysis Scenario Analysis Historical Financial Summaries Selected Recommendations: BUY EXCO Resources (XCO) BUY Cimarex (XEC) BUY Halcon Resources (HK) BUY Hilcorp Energy I (HILCRP) BUY Newfield (NFX) BUY Range Resources (RRC) SELL Denbury Resources (DNR) Recommendation Changes: HOLD Chesapeake Energy (CHK) from BUY SELL Forest Oil/Sabine (FSTO) from HOLD SELL QEP Resources (QEP) from HOLD SELL SandRidge (SD) from HOLD SELL Samson Resources (SAIVST) from BUY E&P Screening and Analysis for the following E&Ps: American Energy Permian (AEPB) Newfield (NFX) Antero Resources (AR) Oasis Petroleum (OAS) Bonanza Creek (BCEI Parsley Energy (PE) Chesapeake (CHK) Penn Virginia (PVA) Cimarex (XEC) QEP Resources (QEP) Concho Resources (CXO) Range Resources (RRC) Danbury Resources (DNR) Rosetta Resources (ROSE) Diamond Back Energy (FANG) Samson Resources (SAIVST) EP Energy (EPE) Sanchez Energy (SN) Exco Resources (XCO) SandRidge (SD) Forest Oil/Sabine (FSTO) SM Energy (SM) Halcon Resources (HK) Triangle Petroleum (TLW) Hilcorp Energy (HILCRP) Tullow Oil (TLW) Magnum Hunter Resources (MHR) WPX Energy (WPX) Midstates Petroleum (MPO) Deutsche Bank Securities Inc. DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MCI IP) 148/04/2014. EFTA01097655 13 January 2015 HY Corporate Credit Energy HY E&P Sector Overview: Sifting through the carnage 3 E&P Credit Screens and Analysis E&P Credit & Operational Metric Screen 18 Overall E&P Screen: Results and Ranking Snapshot 20 Leverage Screen 23 Current PV-10 to 2016 Debt Screen 26 Liquidity Screen 28 Hedging Screen 32 Adjusted Cash Margin Screen 35 Commodity Mix Screen 39 Conclusion: E&P subsector weighting: Maintain Underweight 41 DB Commodities Price Deck & Outlook 42 E&P Industry Relative Value Sheets 46 Quarterly Updates for E&Ps under coverage Chesapeake (CHKI 54 Cimarex (XEC) 60 Denbury Resources (DNRI 66 Exco Resources IXCO) 72 Forest Oil/Sabine (FSTO) 77 HaIcor) Resources (HK) 82 Hilcorp Energy (HILCRP) 87 Newfield (NFX) 92 QEP Resources (QEP) 97 Range Resources (RRC) 102 Samson Resources (SAIVSTI 107 SandRidge (SD) 112 Financial Summaries and Sensivities for Non-covered E&Ps American Energy Permian (AEPBI 118 Antero Resources (AR) 120 Bonanza Creek (BCEI 122 Concha Resources (CXO) 124 Diamond Back Energy (FANG) 126 EP Energy (EPEI 128 Lightstream Resources (LTSCN) 130 Magnum Hunter Resources (MHRI 132 Midstates Petroleum (MPO) 134 Oasis Petroleum (OAS) 136 Parsley Energy (PE) 138 Penn Virginia (PVA) 140 Rosetta Resources (ROSE) 142 Sanchez Energy (SN) 144 SM Energy (SM) 148 Triangle Petroleum (TLW) 150 TuIlow Oil (TLW) 152 WPX Energy (WPX) 154 Page 2 Deutsche Bank Securities Inc. EFTA01097656 13 January 2015 HY Corporate Credit Energy HY E&P Sector: Sifting through the carnage Oil price collapse - how did we get here? Looking back, oil fundamentals at the recent peak in the June/July 2014 timeframe were seemingly decent. Despite some volatility, discussions with E&P management teams were bullish in the face of increasing service costs, and capex budgets looked to be rising as higher than anticipated oil prices drove greater than expected cash flow. On the geopolitical side, we had rising tensions in the Middle East posing a headwind for OPEC supply (driver of a majority of future OPEC supply growth). Further, M&A chatter was relatively strong after the Whiting (Will/Kodiak (KOG) acquisition announcement. In summary, there were few reasons the market had to be concerned about the sector. Fast forward six months and the world has changed, leaving investors to ask the question, "how did we get here?" Looking through the wreckage now, it does seem that there were missed signs that when taken to together pretty clearly mark how we reached our current oil destination (WTI trading at less than $50). From 2002 to 2012, global demand growth averaged over 1.1 million b/d while non-OPEC supply growth averaged only 560 Kb/d; this excess demand supported a generally increasing oil price. That trend reversed itself starting in 2013 as average global demand fell below 1.0mmb/d at the same time non-OPEC supply growth accelerated to an average of t6 million b/d. Specifically and more dramatically in 2014, the difference between incremental annual world demand growth and non-OPEC supply growth gapped out to an oversupply of 1.2 million b/d - a differential not witnessed in decades (Figure 1). This was the backdrop as OPEC met on November 27th and decided to maintain its ceiling production level of 30.0 million b/d. Figure 1: World Oil Demand and Non-Opex Supply Growth 2000 •World demand growth (kbd) 1800 Total non-OPEC supply growth (kbd) 1600 1400 - 1 I.[ II 1200 1000 - 800 600 - 400 • 200 - 0 2014E 2015E 2019E 2020E &wet BA a DB arntnAta Looking at the individual pieces of this story, the current outcome now seems like a reasonable one. Anecdotally, North American E&Ps had seen a relatively steady pattern of hitting production guidance if not beating - and raising - through the Q2 14 earnings season and eventually the Q3 reporting season. This came despite some tough weather to start off the year. Looking at the Deutsche Bank Securities Inc. Page 3 EFTA01097657 13 January 2015 HY Corporate Credit Energy demand side of the equation, there was a key difference in expected demand momentum as we moved through 2014 versus 2013 (Figure 2). While in 2013 there was a relatively slow but largely steady improvement in expected demand through the year, 2014 started strong but saw a marked deterioration in expected demand that started in August but declined precipitously as we moved through year-end. These two factors left a bit of a perfect storm for oil in and around the time of the OPEC meeting. While analysts were somewhat split on the expected specific outcome, a majority expected an OPEC production cut of some sort to help stem oil oversupply (9 out of 13 street analysts polled by Reuters). All of this led to a dramatic move in oil when OPEC decided to maintain the current 30.0 million b/d ceiling production without even a minor cut, which was seemingly the market's last chance to stabilize oil prices. Worse, all of this played out against an actual OPEC average production level 30.2 million b/d YTD through November 2014; the whisper production for December is 30.7 million b/d — and that includes lower Libyan production. Figure 2: Global Demand Growth Expectations Over Time mb/d 2013 — — 2014 2016 1.5 1.4 1.3 • • 1.2 • 1.1 • 1.0 • 0.9 0.8 • 0.7 S. • 0.6 ro 7 co 7 7 co e) m co • 7 • •7 IT 7IP I—V, a RI 0' # C I4 LL4 2 4 . asc Sane! 'EA 08Cooly Absturcet Oil looking forward - Are we there yet? The simple answer is no. Despite the significant amount of pain inflicted already, unfortunately, we believe there is likely more to come in 2015. Excluding the 2008/2009 (which was even more extreme), the average sell-off in an oil bear market reached its nadir with an average decline of 500/0 from the peak over a 15-month period (Figure 3). Currently, we have observed —60% decline in oil prices from the peak; however, we are only 7 months into this episode. Interestingly, of the four episodes shown, the one where oil reached its low point in the shortest amount of time was in 1986 - the historical data point that sets up the most like current scenario; in that case, OPEC too played a significant role in the 1986 oil bear market. However, at that time, it was other OPEC producers that were squeezing out marginal Saudi Arabian barrels. This time the US is playing the role of Saudi/OPEC spoiler by growing its unconventional production base and squeezing out OPEC barrels. In any case, despite a significant decline in oil prices so far, we don't see any expected changes to the major drivers of oil price in the near term. Page 4 Deutsche Bank Securities Inc. EFTA01097658 13 January 2015 HY Corporate Credit Energy IFigure 3: Prior Bear Markets in Industrial Commodities Commodity Stan End Duration, mo Drawdown, % Oil 11/2211985 07/25/1986 8 -56 Oil 10/18/1992 12117)1993 14 -37 Oil 01/10/1997 12/11/1998 23 -58 Oil 11/24/2000 01/1812002 14 -48 Nat Gas 10/24/1997 08/28/1998 10 -52 Nat Gas 04)06/2001 01/25/2002 10 -61 Nat Gas 06110/2011 04/13/2012 10 -60 Aluminum 08126/1988 02/02/1990 18 -45 Aluminum 08118/1995 03/12/1999 43 -38 Copper 08121/1992 10/22/1993 14 -37 Copper 08121/1995 02/22/1999 43 -54 Iron Ore 08126/2011 09/07)2012 13 -50 Avg for oil 15 -50 Avg tor all 18 -50 Current episode Oil 06/20/2014 01/10/2015 7 -54 Aluminum 04/29/2011 01/10/2015 45 -36 Copper 07/29/2011 01/10/2015 42 -35 Iron Ore 12/062013 01/10/2015 13 -49 Sane oe Oral' $ea411Y While recent oil downturns have had a relatively quick "V" shaped recovery, we do not believe that this will be the case this time. We believe recent more episodes (97198, 08/09) were reflective of more general market improvements and a retum to functioning capital markets (post the Russian default and post the financial crisis, respectively). These overall market recoveries, while important to oil, particularly the demand side, were somewhat outside direct, physical oil markets. Where this bear oil market is concerned, we don't see a quick macro event outside of physical oil markets as the panacea or quick fix. Rather, we are looking for a more "U" or "L" shaped recovery for oil. In 1986, again, oil priced quickly raced to the bottom over an 8-month period, but then, excluding the first Iraq war, took about 14 years to recover. To be clear, we are not making that extended recovery call here because we do believe that there were anomalies to the 1986 case. One anomaly being the 1986 Tax Reform Act and its net effect on overall US GDP, which according to the World Trade Organization, would normally have seen a greater positive effect from lower oil. However, even looking at the more "normalized" oil recoveries listed (excluding 1986 and 2009), it took oil anywhere from 11 to 26 months to return to its previous peak, leading to an average 17-month oil "recovery" time. Importantly, we acknowledge that markets are forward looking, and therefore believe that a change in sentiment itself could likely precede the actual improvement in oil, and also energy-related securities. We focus here on those data points that could improve the market mentality around oil. Note: we discuss the expected recovery cycle for high yield energy bonds specifically later in this outlook. Deutsche Bank Securities Inc. Page 5 EFTA01097659 13 January 2015 HY Corporate Credit Energy IFigure 4: Oil Supply-Demand Forecast 2013 2014e Nov-14 2015e 2016e 2014/13 2015(14 2016/15 2015/Nov-14 Consideratations OECD 46.1 45.6 45.6 45.5 -0.5 0.0 -0.1 US vs Europe GDP outlook Non-OECD 45.7 46.8 47.8 49.3 1.1 1.0 1.4 How resilient is China demand? Oil Demand 91.7 92.4 93.4 94.8 0.7 OS 1.3 Will lower oil price prompt upgrades? US 10.2 11.7 12.7 13.3 1.5 1.0 0.7 Pace & magnitude of supply response Other non.OPEC 44.4 44.8 45.1 45.5 0.4 0.3 0.6 Risk of delays, disruption & capex cuts Non-OPEC Supply 54.6 56.5 57.8 58.8 1.8 1.3 13 OPEC NGLa 6.3 SO 6.7 6.8 0.1 0.3 0.1 Libya 0.9 0.4 0.7 0.7 0.9 -0.5 0.3 0.0 0.0 Is there further downside supply? Iran 2.7 2.8 2.8 2.8 2.8 0.t 0 0.0 0.0 Possibility of mid-15 nuclear deal Iraq 3.1 3.3 3.4 3.4 3.3 0.2 0.1 0.0 0.0 Other 24.2 23.2 23.4 22.0 22.5 -t.0 -1.2 -0.3 -1.4 Will Saudi add supply if non-OPEC falls? Cell on OPEC 309 29.5 30.3 28.9 292 -1.4 -0.6 -0.3 -1.4 1.4mb/d reduction needed vs Nov-14 &wet De teary Sanwa, Looking at this simplified supply and demand outlook for oil sums up our thoughts on a longer term recovery. Given no expectation for a call on OPEC in 2015, we believe oil prices will persist at lower levels through 2015, especially in 1H 15 as the market is currently 1.4 million b/d oversupplied. The basic levers that could improve the supply and demand dynamics in the next year are the following in our minds: (i) better than expected economic growth (ie demand), (ii) more volatile seasonal weather patterns, (iii) faster than expected Non-OPEC production declines, (iv) a sooner-than-scheduled OPEC meeting (June currently), (iv) a sooner than scheduled OPEC meeting (June currently), or (v) unexpected geopolitically-related production declines. IFigure 5 GDP Forecast & Revision (% yoy) Forecast level Forecast change since Dec' 14 WO Sep' 14 WO' 2019E 2015E 2015E 2019E 2015E 2018E G7 1.8 2.5 2.4 -0.1 0.0 0.0 US 2.4 3.5 3.1 0.1 0.1 -01 Japan 0.5 1.4 1.6 -0.6 0.1 0.2 Euro area 0.8 1.0 1.3 0.0 -0.1 -0.1 Asia (ex-Japan) 6.0 6.2 6.1 -0.3 -0.7 -0.7 China 7.3 7.0 6.7 -0.5 -1.0 -1.3 India 5.5 6.5 6.5 0.0 0.0 0.0 EEMEA 2.3 1.9 2.5 0.4 -0.8 -0.4 Russia 0.5 -0.9 -0.4 0.0 -1.9 -1.8 Latin America 0.8 1.5 2.9 -0.2 -0.6 -01 Brazil 0.1 0.7 t.9 -0.2 -0.5 0.0 Advanced economies 1.7 2.4 2.3 0.0 0.0 0.0 EM economies 4.4 4.5 4.9 -0.2 -0.7 -0.6 Global 3.2 3.6 3.8 0.0 -0.3 -0.2 Sane Onift:Oe &Pat tco, tvwci Noe 'Sommer( OWN Onto* losakus Are torn ma%caned lamp Orrobei nfOPPP*arts Page 6 Deutsche Bank Securities Inc. EFTA01097660 13 January 2015 HY Corporate Credit Energy First, we look at the demand side. Looking at what our economics team is expecting for 2015, it is clear that despite the drop in oil prices (and its positive follow-on effects for certain economies), expected global growth trends have seen a notable decline over the last quarter of 2014. This is evidenced by the deceleration of expected growth reflected in our estimates, especially in Asia. The main drivers of the downgrades are driven "entirely by markdowns to emerging market growth prospects, which were reduced by more than 1/2 percentage points over the next two years. These downgrades were broad- based across regions, with three of the BRICs, Russia, China, and Brazil (in that order) recording the largest and most important downward revisions. Most important is the downward revision to China, where we now see increased negative spillover from past overinvestment in property and the government focused on a more sustainable 7% rate of growth. Global growth is expected to bottom at a relatively subdued rate of 3.2% in 2014 and rise slowly over the next two years." We see little possible upside here, and in fact, believe there could be further downside to global demand. Next, we look at the seasonality of oil and the possibility for more volatile seasonal weather patterns. Historical and expected oil demand seasonality is reflected in Figure 6 on the left. In the chart on the right, we overlay DB's quarterly demand/non-OPEC supply projections holding OPEC production flat at the October 2014 level (30.6 million b/d). Looking at Figure 7, one can see that the magnitude of the expected level of oversupply (1.5 million b/d in 1H 15) is well above historical averages. While many would look to Libya as the inevitable OPEC producer most likely to decrease production given recent unrest, even assuming no production from Libya, DB estimated excess oil supply in 1H 15 would still be 0.7 million b/d. This would leave the market needing a significant and unlikely change in weather to absorb excess supply in 1H 15. For example, last year a colder-than-normal winter increased seasonal demand by —250-300K b/d. On the margin, we see the seasonal demand effects of oil as well as marginal economics (discussed below) as a key reason for sub-S50/bbl oil at least through 1H 15. Figure 6:1H Global Crude Demand Typically 1 Million b/d Figure 7:2015 Will Require Market to Absorb >Normal less than FY Seasonal Excess LON ton counter seasonal move In 1)00 stocks/other m 2H14 to absorb over-supply 1.000 1400 Seasonality typically means that III demand is —1mb/d 000 140 below the FY avg. 0 400 400 4,500 If we assume NOreduction InOPEC supply Vs 4014 pressue to absorb 4400 4.000 peaks In 2Q15 with larger than normal IH stock build required -1400 4.500 01 02 CO 01 Oi a to ea • 2011 *2012 •201.1 420W0 42010. •201I ann 52013 salll. noise Sauces LA DitEtonorna D (ecotone* Sam* Moving onto supply, we look at Non-OPEC production. For purposes of this discussion, we are talking largely about US production growth as markets (and OPEC) are now looking towards the US for a supply response (i.e. significant reduction in annual oil growth). However, we do not think that supply response will be one readily observed in 2015 largely due to (i) a significant inventory of drilled but uncompleted wells (up to 6 months of inventory per producer), (ii) a relatively high level of hedging in 2015 (less so in 2016), (iii) the ability to high grade to the most economic plays, (iv) recently achieved drilling Deutsche Bank Securities Inc. Page 7 EFTA01097661 13 January 2015 HY Corporate Credit Energy efficiency, and (v) decreasing non-productive capital spending (test wells, seismic, infrastructure, etc). As we consider 2016, our equity counterparts have looked at the issue of US growth and asked the question: "What would we need to see from the industry to normalize production growth from 2016 forward at a level more consistent with demand expectations? (i.e. reduce US YoY supply growth to 500-600 Mb/d)." They estimate "that at minimum, the industry would need to drop —160+ horizontal rigs from the "Big Three" plays (Bakken, Permian, Eagle Ford) - or -25% of the near 700 rigs currently operating in these plays. The implications for the overall oil rig count (-1,600) is much more severe, as vertical rigs and marginal plays would likely fall off first, implying a total rig cut of 500+." If this scenario plays out as expected, it suggests that US YoY supply growth would be reduced from 0.90.1.0 million boepd now to about 500-600K boepd, or a reduction of 300-400K boepd. We believe markets would view this move as significant. Looking at Figure 8, the good news is that we have seen some solid progress towards decreasing horizontal rigs by that —160 figure. Since the OPEC meeting in late November, horizontal rig count in the Big Three plays has decreased by 40 rigs or about 25% of the DB required cut - and the biggest step down came in this past week. In that same span, total US rig count has decreased by 167 rigs or about 33% of the DB required cut - again, with the best step down coming this past week. Not surprisingly, the necessary decline in less efficient rigs (both vertical rigs and rigs in marginal plays) is happening faster than for the core three plays, where rigs are most efficient. IFigure 8: US Drilling Rig Score Card Since November OPEC Meeting Total Rigs Across All Basins Directional Horizontal Vertical Total Rigs working as of OPEC Meeting 194 1,371 352 1,917 12/5/2014 WoW change 4 (3) 2 3 12/12)2014 WoW change 121 (II (24) 127) 12719/2014 WoW Mange Ill 111l (6) 118) 12/26/2014 WoW Mange (141 161 (15) 135) 1/2)2015 wow change (61 (141 19) 129) 1/9/2015 WoW change (141 (351 (12) 161) Rigs working as Week 1/9 161 1,301 288 1,750 Total Rig Decline since OPEC Meeting (11/27) (33) (70) (64) (167) Total Rig Decline since Relative Oil Peak 16/20) (671 51 (92) (108) Horizinal Rig Decline in the Big 3 Plays Eagle Ford Permian Bakken Total Riga working ea of OPEC Meeting 207 363 189 769 12/5/2014 WoW change 131 4 (3) (2) 12712/2014 WoW change 121 171 (1) 110) 12/19/2014 WoW change 2 4 (7) (1) 12/26/2014 WoW change 121 3 (2) (1) 1/2/2015 WoW change (51 0 0 (5) 1/9/2015 WoW change 131 (101 (8) 121) Rigs working as Week 1/9 194 357 168 719 Big 3 Rig Decline since OPEC Meeting (11/27) 1131 (61 (21) (40) Big 3 Rig Decline since Relative Oil Peak (6/20) 10 (34) 7 117) Savo. Bab/ I& Page 8 Deutsche Bank Securities Inc. EFTA01097662 13 January 2015 HY Corporate Credit Energy Beyond these initially positive data points on lower rig count, there are upside supply risks in the form of high grading and drilling innovation. The natural gas playbook has shown us that producers across the board have proven to be innovative during price dislocations like the one we are currently experiencing. Over the past several years, the path of continued drilling improvement has been the norm for producers. While some plays are further along the innovation road (Bakken, Eagle Ford) than others, we believe the current environment will only incentivize producers to push for further process improvements; we should continue to see more production with less capital. That said, as producers narrow their focus and look to high grade to only the top plays (Permian), other relatively less attractive plays like the Bakken and Eagle Ford will see drilling dollars move out. One can see this above where Permian horizontal rig count has gone down by just 6 rigs since the OPEC meeting, and Bakken and Eagle Ford horizontal rig count has declined by 21 and 13 rigs, respectively. The offset to the high grading and efficiency points would be an inability to regain momentum. Producers have also done an excellent job maintaining momentum over the past several years by securing low cost capital, protecting cash flows with hedges and innovating operationally; prolonged, depressed oil prices will eliminate two of those levers for a time, limiting how and where E&Ps can allocate spending dollars most efficiently to generate an acceptable return. Moving on to OPEC, when looking at the recent non-action with our energy hat on, it clearly shows OPEC, and really Saudi Arabia's, intention to maintain market share in the long term. It plainly had two decisions - either let higher cost Non-OPEC oil growth continue to encroach and likely accelerate over time, or take a stand to undermine Non-OPEC supply now before it became a bigger threat. The OPEC decision does indeed make sense on a stand-alone basis, but there are a couple other "ancillary" benefits to OPEC/Saudi Arabia including inflicting pain directly on both Iran and Russia through lower export revenues. Pressuring Russia further benefits Saudi Arabia as Russia will be a weaker supporter of Iran, its most significant rival in the region. Given that Saudi Arabia has about twice the level of govemment assets Russia does (on an annual basis: government assets divided by budget deficit), it can afford to withstand a low-price oil environment for longer to protect its long-term market share. 1 Figure 9: US Onshore Oil Breakeven Economics ▪ 00 • 410 • $(0421 $41.170 L ON - MOS VS SO) • 20 US 350) • S32$90 •1%599 3>1% 3," ?MO ?MO a 1270 110 5,0 i 2014 mr in* Sweet Wood illakania; DB Equey Rtrakarch Wood Mackenzie has done analysis to show the medium to long term breakeven economics of US unconventional crude supply (above). It clearly shows that a majority of US unconventional plays break even in the S65-70/bbl Deutsche Bank Securities Inc. Page 9 EFTA01097663 13 January 2015 HY Corporate Credit Energy area. It is important to keep those levels in mind when considering OPEC's next move. In order to inflict maximum damage to base US production, oil prices need to stay below long term breakeven levels for a sustained period of time. On the flip side, US E&Ps will do what they can in the short term to side- step a permanent momentum shift in their core plays. As we have seen, oil prices are slowly converging on this short-term, US unconventional "marginal" cost ($15-30/bbl range, discussed later). Taking all this together, we do think OPEC is prepared to maintain current supply at this level to maintain share in the long term. If it stopped short of its intended goal of slowing US supply, why embark on this path in the first place? Lastly we consider the possibility geopolitically-related and other production decreases or increases. Libya comes to mind first as recent unrest shutdown its El Sharara field, which was producing 270K b/d. This decreased November production down to 638K b/d from its previous peak of 883K b/d. As lower oil prices continue to pressure Venezuela and its stability, that will be another country to watch. Rounding out the areas of interest are West African deepwater projects and Russian Arctic projects - both of which are on the high-end of the breakeven cost spectrum. Beyond these specific areas to watch, we would point out Non-OPEC related growth does tend to underwhelm, and it would need to outperform on a larger scale in 2015 to offer any meaningful upside surprise large enough to affect oil prices. The last wild card we would point out here is China and its Strategic Petroleum Reserve (SPR). China's SPR purchases averaged —500K b/d for most of 2014. Now, Chinese SPR-related imports are thought to have peaked in December as the country took advantage of depressed oil prices with upwards of 700K b/d in estimated purchases. Despite brisk Chinese demand last month, most expect this specific demand level to moderate moving forward as the country is apparently close to filling existing reserve capacity. The combination of all of the previous five factors, seasonality in particular, is clearly reflected in investors current thinking on oil prices. DB recently surveyed equity investors with a majority of those surveyed (70%) of the belief that oil will bottom by the end of 1H 15. In particular, that same set of investors overwhelmingly believes that North American crude supply is the biggest driver of oil prices (50% ranked it the top factor). We would tend to agree more with the second observation and believe that the signs of slowing North American production are key to the recovery in oil prices after 1H 15 seasonality plays through; we believe improving oil price will require some positive oil supply data points (e.g. inventory draws coming in 2H 15, continued progress on decreasing horizontal rigs in the Big Three oil plays) to give that psychological boost needed to change oil market momentum, even if those positive data points don't immediately translate to lower observed supply growth. In the near term (1H 15), we would expect to see sub-$50 oil persist as the market continues to be oversupplied by1.4 million b/d. Also, to put current trading levels into perspective, WTI prices would need to fall to $45 to surpass the 58% collapse in the oil price during the Jan 97/Dec 98 episode; it seems appropriate to compare recent price action to that episode since during the first half of this year global oil supply will be growing in excess of global oil demand by its largest margin since 1998. Specifically, we think this 97/98 case also speaks to the possibility of 2015 being a lost year, and thus, investors focus on 2016 as the next meaningful point in time for price recovery. Given we are approaching what could be the lows in oil, where we with HY E&P in the credit cycle now? While we have seen many episodes where oil prices have declined over 50%, none of those were prolonged enough to coincide with a restructuring of the entire E&P sector during a time when we had a fully developed and functioning HY market. For example, the 1986 episode did illustrate a Page 10 Deutsche Bank Securities Inc. EFTA01097664 13 January 2015 HY Corporate Credit Energy prolonged bear market in oil, but there is no reliable data for that period. What this table and particular analysis shows us is that we are at and beyond the average decline for an oil cycle, which is a 50% decline. That said, while finding the bottom for oil is important, the recovery story is equally important. IFigure 10: Cumulative cyclical peak default rates in HY and IRRs on energy bonds from current levels Year 1 Year 2 Year 3 To: Year 1 Year 2 Year 3 Cyclical Peak Cumulative Default Rates Coupon Price Surviving Par BBB 0.5 1.1 1.8 5.5 106.0 BBB 100 100 99 99 BB 1.7 6.6 10.1 6.0 95.8 13B 100 99 96 94 B 5.7 18.2 25.1 7.4 81.9 8 100 97 91 87 CCC 19.9 42.3 51.6 8.4 59.2 CCC 100 94 86 83 All HI 5.7 16.7 22.9 6.8 85.5 HY 100 97 91 88 Single-Bs/CCCs 32.4 Coupon BBB 5.5 5.5 5.4 BB 5.9 5.8 5.7 8 7.3 6.9 6.6 CCC 8.1 7.6 7.1 HY 6.7 6.4 6.1 Percent Downgraded BBB 20 10 5 BB 25 13 6 8 .- _ _ CCC — Dollar Prices, Adjusted for Downgrades BBB 106 102 101 100 BB 96 89 87 86 a 82 82 82 82 CCC 59 59 59 59 HY 86 82 81 81 Market Value (Credit Loss . Coupon 4 Downgrades) IRR BBB 106 107 106 105 -1.2 BB 96 94 90 87 -9.4 B 82 87 81 78 -4.8 CCC 59 64 59 56 -4.7 HY 86 87 82 79 -7.3 Sousa °anent Ban*Ove4 arraroev While we don't have a specific example of an energy sector restructuring, our counterparts in credit strategy have done work on cumulative cycle peak default rates in the overall HY sector. In Figure 10. they show average cumulative default rates in HY over the last three credit cycles (measured in 1989-1991, 2000.2002, and 2008-2010 by Moody's issuer-weighted rates). According to this data, we are looking at an average cumulative default rate of 22.9% for the whole HY spectrum and 51.6% for CCCs only. Looking at the bottom section, titled Market Value, $59 invested in an average CCC energy bond today should return $56 at the end of year 3 yielding a -4.7% IRR. Percent changes on the right are calculated between these two values, non- annualized. So how do we interpret these numbers? The good news here is that using a relatively negative set of assumptions — cyclical peak default and downgrade rates (based on broad market historical stets) and unchanged dollar prices on the exit from year three — are resulting in only single-digit negative retums from here, implying that to a good extent, the bad news has been priced in. An important bullish assumption that we are purposefully not including here - that a surviving CCC could be worth more than $59 at the end Deutsche Bank Securities Inc. Page 11 EFTA01097665 13 January 2015 HY Corporate Credit Energy of year 3 - could single-handedly result in positive IRRs. Consider: only three months after the end previous two credit cycles in 2002 and 2009, an average CCC jumped in price from low 50-ies to low 70-ies (measured in June 2003 and June 2009). If we were to plug in a $70 year 3 price assumption for surviving CCCs in Figure 10, non-annualized IRR jumps to +10%. For a more detailed explanation of assumptions to reach these conclusions, please see DB's US Credit Strategy: What is Priced in Energy Bonds Here? (December 18, 2014). Despite a dearth of examples around a crisis in HY energy, or more specifically Figure 11: Widest Levels of Each the E&P sub-sector, we do have some examples of where other distressed HY Crisis sectors traded at crisis levels (right). If these restructured sectors hold any 88s 8s CCCs weight, it seems by this metric, we still have downside on a spread-basis Real Estate 12/31/2008 1,573 2,008 4,702 before we reach the bottom for HY E&P bonds. Despite somewhat conflicting answers from the above two analyses, we think the takeaway for HY credit is Media 11/30/2008 1,128 2,029 3,508 that we are getting there but not be at the optimal entry point for bonds. Autos 12/31/2008 1,546 2,036 2,473 Further, investors need to consider time horizons as they relate to various Telecoms 07/31/2002 1,398 1.014 3,966 investing strategies and whether or not funds are locked-in. Lastly, with a Gaming 11/30/2008 1,895 1,870 2,485 significant level of default (blended rate of 30% for B/CCC), there will be clear Average 1,508 1,791 3,427 winners and losers, outcomes will be very binary outside of buying a diversified basket of lower-quality HY E&P credits. Energy 01/08/2015 465 960 1,896 % of other crisis levels 30.9%53.6% 55.3% What can we expect in terms default rates and recovery should there be a full- Sane Dooncft Bent scale restructuring of energy names? As we have not seen a full scale restructuring of the sector is hard to pinpoint exact figures here. Moodys reported that during the last two credit cycles for E&Ps (1998-1999, 2001-2002), a majority of unsecured creditors received a range of 35-50% recoveries with an average recovery of 40%. This is better than the average industrial recovery of 29%. Fitch has reported similar numbers. From 2000-2013, the average recovery rate for energy was 45%; compared to a 37% for the total market. However, the spread on recoveries in any given year was relatively wide with a low of 8% in 2001 and a high of 76% in 2011 looking at the Fitch data. Important to note that per Fitch, the comparative default rates for energy have been relatively mild at 2.0% from 1980-2012, this compares to a 4.6% default rate for the overall market during the same period. What other major catalysts need to play out to trigger defaults for HY E&Ps? As we look at maturities due in HY energy over the next couple of years (Figure 12), it is clear that most energy companies including E&Ps have termed out debt. This is not surprising given the historically low rates issuers have achieved in the HY market over the last several years. One can see that there is a little less than $4 billion in overall energy HY bonds coming due in the next two years. In Figure 13, we lay out the specific energy bonds that are coming due in 2015 and 2016. After those years, we see a relatively larger maturity wall of $18 billion in 2017. Page 12 Deutsche Bank Securities Inc. EFTA01097666 13 January 2015 HY Corporate Credit Energy 'Figure 12: North American HY Energy Debt Maturities Ex-Coal 45 44 38 32 22 23 2015 2016 2017 2,018 2019 2020 2021 2022 2023 2024 2025. •BB ■B •CCC Total Sew&r Deundie &Mk Itibarktep Ramo. LA 'Figure 13: Specific 2015/2016 Debt Maturities Issuer Ticker Maturity Notional Currency Country Energy Sub-Sector Moodys S&P 'SIN Vermillion Energy VETCN 2016-02-10 $199 CAD CA Oil Comp-Explor&Prodtn NR 8B- CA923725AA31 Black Elk Energy BLELK 2015-12-01 $139 USD US Oil Comp-Explor&Prodtn NR B- US09203YAC57 Boardwalk Pipelines LP BWP 2016-11-15 $250 USD US Pipelines/Energy Storage 8aa3 BB+ US096630AA61 Chesapeake Energy CHK 2016-03-15 $500 USD US Nat Gas Exploration Bat BB+ US165167C.149 OEP Resources OEP 2016-09.01 $177 USD US Nat Gas Exploration Bat BB+ US74836JAD54 Quicksilver Resources KWK 2016-04-01 $350 USD US Nat Gas Exploration Ca C US74837RAC88 RAAM Global Energy RAMGEN 2015-10.01 $243 USD US Oil Comp-Explor&Prochn Caa3 CCC+ US74920AAC36 Rockies Express Pipeline ROCKIE 2015-04-15 $450 USD US Pipelines/Energy Storage Ba2 BB US77340RAH03 Sabine Pass LNG LP COP 2016-11-30 gun USD US Pipelines/Energy Storage 81 8B+ US785583AF20 $3,790 SOW* Z1/4•01010 &ink COnvhgew DMA We really see further default triggers coming down to borrowing base redeterminations. While ostensibly there is not a significant amount of debt coming due in the next two years, what simply looking at the maturity schedule misses is the way HY issuers have traditionally used their reserve based lending facilities ("RBIs"). In a nut shell, E&Ps, especially those with lower credit ratings, use these facilities as a way to fund near term drilling plans with intention of terming out these draw downs with HY bonds. Looking at Figure 14, many E&P currently have 50% or more availability on their revolvers. Looking forward two years in different oil price scenarios ($50/$60/$70 oil & $3.75 nat gas) and assuming some increases in borrowing bases as E&Ps increase PV-10, then about 15.35% of high yield E&P issuers in the broad universe we are screening have less than 50% RBL availability at FYE 16. Looking at a more conservative case, where the screened universe is afforded no borrowing base increases, then more like 20.50% of HY issuers have less than 50% RBL availability at FYE 16. Looking more closely at the figures, there are certain issuers that would actually have negative availability. In other words, they would need to raise more capital in addition to their current borrowing base as the scenario analysis shows these companies running out of cash. Further, there is a possibility that banks do in fact decrease the borrowing base of some of these E&P causing an even more draconian scenario. Deutsche Bank Securities Inc. Page 13 EFTA01097667 13 'Figure 14: HY E&P Liquidity Overview m as P. RBL (Overdrawn)/Available in 2 years RBL (Overdrawn)/Available in 2 years 9. 2 as %of starting Availability as %of starting Availability % Available Selective Borrowing Base Increases (3) Borrowing Base Unchanged (31 "8 $ milions Borrowing Resulting All Current as of $70/$3.75 560/53.75 $50/53.75 570/53.75 560/53.75 $50/53.75 N O Trek& Company Name Base Commitment Avallablity Availability (2) 9/30/14 (2) at FYE 16 at FYE 16 at NE 16 at FYE 16 at EYE 16 at EYE 16 ALM American Permian Caal/CCC, $650 $1.000 $650 $550 85% -5% -21% -36% -54% -77% 100% C. MPO Midstates Petroleum 9.(Stable)/Caal(Stable) $525 $750 $525 $154 29% 18% 16% .6% -71% -113% -195% son/sr Samson Investment Caal(Neg W)/CCC(Neg W) $1,000 $2,250 $1,000 $411 41% 21% 10% -1% -70% -95% -119% SEVGEN Seven Generations 931Pos)/CCC.(Stable) $480 $480 $480 $480 100% 15% 20% 5% -36% .66% -97% WPX WPX Energy 9a1(Stab!e)/EtB4(Negi NA $1,500 $1,500 $614 41% 77% 37% 19% 70% 24% 2% MHR Magnum Hunter 93iStable)/CCCINeg) $325 $750 $325 $175 54% 43% 33% 24% -49% -73% -99% HIE HiIcor is Energy Ela3 MEW $1,400 $1,250 $1,250 $1,249 100% 63% 44% 26% 58% 38% 17% 50 SandRidge Energy 92iStable)/B.IStablel $1,200 $900 $900 $746 81% 63% 46% 29% 42% 15% -12% ROSE Rosetta Resources 91iStable)/681Stablel $950 $800 $800 $690 86% 94% 73% 51% 91% 69% 46% XEC Cimarex Energy 9a l(Positive)/BEW(Positive) $2,500 $1,000 $1,000 $998 100% 122% 89% 55% 124% 87% 51% CXO Concho Resources 843(Ros)/BEW(Stable) $3,250 $2,500 $2,500 $2,500 100% 71% 64% 57% 65% 57% 48% SM SM Energy 9a2(Stable)/BEI(Pos) $2,400 $1,500 $1,500 $1,499 100% 84% 71% 58% 71% 50% 27% RRC Range Resources ElaT(Ros)/184(Stable) $3,000 $2,000 $2,000 $1,247 62% 86% 73% 60% 81% 67% 52% PVA Penn Virginia Caal(Stabk)/6-(Stabk) $438 5450 $438 $498 114% 81% 72% 64% 75% 63% 52% XCO EXCO Resources 93iStable)/CCC.(Stable) $900 NA $900 $789 88% 71% 68% 64% 66% 62% 58% BCEI Bonann Creek Energy 93iStable)/B.IStablel $450 $400 $400 5426 107% 109% 88% 65% 111% 85% 57% AR Antero Resources 91istab!e)/EtEt (stable) $4,000 $1.060 $3,000 $2,506 84% 85% 76% 68% 79% 67% 55% TPLM Triangle Petroleum Caal/CCC, $415 $500 $415 $430 104% 79% 76% 71% 60% 54% 49% PE Parsely Caal/CCC4(Stabk) $328 $750 $328 $327 100% 109% 97% 77% 111% 96% 72% TLW Tullow Oil 92/B. NA $4,750 54,750 $2,300 48% 92% 85% 78% 92% 85% 78% FANG Diamondback Energy 93iPos)/B.(Pos) $350 5600 $150 $320 91% 127% 103% 80% 145% 106% 66% LTSCN Lightstream Resources Caa2(Neg)/CCOiNeg) NA $1,150 $1,150 5606 51% 121% 103% 85% 121% 103% 85% OAS Oasis Petroleum 92iStable)/EHStabkl $2,000 $1,500 $1,500 $1,145 76% 112% 101% 90% 114% 102% 89% ONR Denbury Resources 91iStable)/98 (Stable) $1,600 $1,600 $1,600 $1,178 74% 142% 120% 91% 142% 120% 93% EPE EP Energy 92/Et $2,500 $2,500 $2,500 $1,849 74% 99% 97% 95% 99% 95% 92% HIE Halton Resources Caa1(Stabk)/CCC.IStable) $1,050 $1,500 $1,050 $704 67% 108% 102% 97% 111% 104% 95% HOC Newfield Exploration 9a1(Stabk)/BEW.(Stable) NA $1,400 $1,400 $1,377 98% 126% 127% 99% 126% 127% 99% SN Sanchez Energy 93iPos)/9-(Pos) $650 $300 $300 $300 100% 169% 147% 126% 238% 195% 151% QEP QEP Resources 9a1(Stabk)/BB4(Stable) NA $1,800 $1,800 $1,796 100% 161% 146% 131% 161% 146% 131% CHIC Chesapeake Energy gal (Positive)/684 (Positive) $4,000 $4,000 $4,000 $1,937 98% 188% 162% 137% 188% 162% 137% son Deanne Bonk 01Airetwo'n on*ratketelioudivn th: $6049 7.5coe, save there o no mime as me &atom.,bra, thrown 2014 !?IMoVoVe wore Rees an0any edStonslisoWer 099,41** Aottworvibokrov con bulb pone. men 100% eyeAWwyN 9/ pero0 OAR wow', A ii evatbl• "mar FEY woe penned alum me 21“, Damn' AScreenmaw ItY wet ~clomp NA, 2.µwrenack F 5 8 F EFTA01097668 13 January 2015 HY Corporate Credit Energy In the past what has caused the banks to decrease RBLs for HY issuers? Overall, since the mid-1990s (start of reliable data), lenders have seen par recovery on RBL facilities in all distressed and bankruptcy situations according to S&P. There are two main reason why this is the case. First, reserve engineers at the major lending banks use a lower price deck than the actual commodity strip price as a base case. And beyond that, the banks run a further sensitivity (aka downside case) that they generally rely on to give them confidence during commodity market dislocations like this one. The second reason banks haven't taken losses on these RBLs is that internal reserve engineers also take a additional discount to the already discounted (9-10%) expected cash flows coming from an E&P's proved reserves. Generally, Proved Developed Producing reserve are discounted at 25%; Proved Developed Non-Producing are discounted at 50%; Proved Undeveloped (PUDs) are discounted at 75%. This is in addition to subtracting out the expected cash flow for the next 6 months of planned production out of the RBL borrowing base. This borrowing base calculation does however give producers the benefit of hedges. Given a lack of material losses in the types of products banks are generally reluctant to materially reduce the RBLs of E&P especially during dislocations like the one we are seeing in oil right now. The general philosophy of the lending banks has been to be more conservative in both directions. When commodities (oil, nat gas) are rallying, banks are slow to move the price deck up; however, the same is true on the way down, which benefits E&Ps in today's bear oil market. That said, borrowing bases were reduced in 08/09, although these reductions were very minor compared to the over 70% decline in oil prices. There have been situations where the banks will reduce borrowing bases more meaningfully. This can happen when an E&P with an already weak financial profile enters a bear commodity market, or an E&P experiences a sudden change in its reserves or production profile (dramatic and unexpected cost increase, reserve write downs, unexpected decline in current production). Can E&Ps raise more money in the HY market today? If necessary BB-rated E&Ps can come to market to issue given average spreads in the 450.470 bps range; looking at our previous liquidity overview, one can see that most of these E&P are in good shape and don't need to issue. Moving down the credit spectrum, lower-rated single-B and triple-C companies are the ones more likely to need the capital. Given that the spreads for energy single-B and triple-C companies are currently 950-970bps and 1,880.1,900bps, respectively, we don't see more traditional unsecured HY deals as feasible today. This highlights the cost of capital problem that lower rated E&P companies now face - these are the real "have nots" in our minds. With traditional HY avenues not open to them we believe two trends will emerge. First, we will see more bilateral deals between E&Ps and providers of capital (private equity, recently-launched energy funds, special situations funds). We have already seen one recent example of this between Linn Energy (LINE) and GSO/ Blackstone (BX). LINE now has a five- year $500 million agreement whereby GSO will earn up to a 15% RoR on wells drilled by LINE in exchange for providing 100% of the upfront drilling costs. EXCO Resources (XCO) led the way on transactions like this; it struck a similar agreement with KKR & Co (KKR) in July 2013 in the Eagle Ford. Rightly so, we believe investors would rather invest in a company and make survival a self fulfilling prophecy rather than try to build sizable positions through the secondary market where ownership brings no incremental certainty around survival. The second trend will be second lien deals. E&P bond indentures are written with relatively open language around the way credit facilities are defined and the Deutsche Bank Securities Inc. Page 15 EFTA01097669 13 January 2015 HY Corporate Credit Energy around liens incurred under debt incurrence tests. We have not seen anything on this front yet, but it's only a matter of time especially with RBLs more likely to shrink in size. This is a clear negative for unsecured debt due to layering. The longer the bear oil market lasts, the more likely second lien deals will come. Will defaults help us move the overall market closer to equilibrium? Unfortunately, we believe many HY E&P companies, particularly single-B and triple-C credits, will be collateral damage rather than contributing meaningfully towards balancing global crude markets. Our equity counterparts have stress tested 2015 US supply growth; the results show that nearly 85% of crude supply growth remains manageable as those producers will remain under 2.5x net debt to EBITDA at FYE 2015 at $70/bbl WTI and $3.75/mcf gas (below). While we are well below that crude price now, it is important to note that about 50% of the 2015 US crude volumes are hedged. This ratio will decline in 2016, but the bottom line is that the larger, more highly-rated producers need to slow production in order to start to see changes to global balances - not the smaller HY players. Figure 15: Funding constraints will eventually have a material impact on supply growth, but nearly 85% of crude supply growth remains manageable at $70/bbl crude through the end of 2015 60 5.0 '135% of 2015 US oil growth comes from companies with 4.5 50 .O less than 2.5x YE2015 Net Debt/EBITDA at $70/bbl, 4.0 $3.75/mcf O 3.5 7..6 40 - OD 3.0 o t Got 30 2.5 co DO >0 20 - 2.0 A OO000000 1.5 00 O O 1.0 .; 10 0.5 -111- 1 0.0 fAetteetp-olatleetel-ettettladq-i 9k9W0-0 • 2015 Oil Growth *2015 Net Debt/EBITDA Saeca. Deutsche Sant CmgnySw What is the market currently pricing in for HY energy bonds? Given this, when should investors look to take positions in HY energy bonds? The preceding indicates that where HY and energy are concerned, we are in uncharted territory. As we mentioned before, there is no good set of energy- specific data to get an idea of an exact entry point for investors. Despite signals of being close to the bottom, there is little clarity on whether this is a "U" or "V shaped commodity (and there HY bond) recovery, which will make a significant difference in how investors with different strategies and timelines look to enter trades. Even if we had seen a significant set of restructurings in HY before, there can be vastly different triggers for those restructurings. Most likely, we see (i) weak balance sheets upon entry into the crisis, (ii) reduced liquidity, and (iii) concentrations in relatively higher cost plays as being the biggest driver of defaults in B/CCC credits -which we believe will be a more clear signal of the eventual entry point. Page 16 Deutsche Bank Securities Inc. EFTA01097670 13 January 2015 HY Corporate Credit Energy Then, who is best positioned to withstand this downturn should it be a three- year cycle? In the HY credit markets, liquidity will be a top driver of performance combined with assets in the best marginal costs plays. This will be further enhanced by better clarity of through cycle leverage. Companies starting off with reasonable leverage, moderate FCF burn, and good hedging are already ahead of the game. In addition, companies that recently termed out RBLs and are working with a high % of current availability will also be well positioned. Lastly, E&Ps that were able to execute on asset sales at pre-crisis valuations are also positioned well where liquidity is concerned. Some HY companies trying to see assets will see those plans put on hold, while others who recently bought will now look like they overpaid. If we want to invest in HY E&P today, how do we sift through the more fragment E&P credits to identify outliers? To answer this question, we developed a screen to apply across a universe of approximately 30 high yield credits - some of which we have a rating on (ie covered companies) and some of which we do not. In order to include non- covered companies in this analysis, we have used Bloomberg consensus estimates to develop sensitivity analysis. Please see the following section called "E&P Universe Screening Methodology" for the full details on our methodology for screening the HY E&P universe and creating sensitivity analysis across all 30 credits. Deutsche Bank Securities Inc. Page 17 EFTA01097671 13 January 2015 HY Corporate Credit Energy E&P Credit Screens and Analysis E&P Credit & Operational Metric Screen When looking at trying to help investors wade through the extremely fragmented E&P sector in US HY, we looked across six main credit and operational metrics including 2016 net leverage, current PV-10 to 2016 net debt, 2016 liquidity assuming a flat borrowing base, 2015 hedges, 2016 adjusted cash margin per unit, and 2016 production mix. We felt this range of metrics would give a wide and varied insight into the path that certain E&Ps might take over the medium term commodity cycle (three years). We first lay out all six of the metrics, which we have ranked into quartiles, and go through the results of the analysis. We then walk through each of the metrics and why they were chosen. E&P Universe Screening Methodology 2016: For covered companies, in our analysis, we used our updated estimates. For non-covered companies, if 2015 guidance has been provided since Q3 14 eamings, we use that. Otherwise, we used the street consensus with adjustments to both capex and production based on credit rating. With that in mind, in 2015, we assume all BB-rated credits follow the consensus estimates as given; street consensus for BBs is generally +1- 10% YoY capex growth with corresponding production growth rates in the 20-30% YoY area. For B-rated credits, we assume a decrease in capex of 25% YoY with a 5 percentage point decline in the corresponding expected consensus production growth. For CCC-rated credits, we again assume a decrease in capex of 25% YoY but this time with a 15 percentage point decline in the corresponding expected consensus production growth. The difference in the production declines in B vs CCC reflects trends we have seen between the two groups so far from companies that had provided actual 2015 guidance. If bonds are split rated, we assume the lower rating of the two ratings. For example, Midstates Petroleum (MPO) bonds are rated Caa1/8-; we therefore applied our assumption for a CCC credit. 2016: For covered companies, in our analysis, we used our newly initiated 2016 estimates. For non-covered companies, we use a similar methodology to what we did in 2015. We assume all BB-rated credits follow the consensus estimates as given. For B-rated credits, we assume a decrease in capex of 50% YoY with no production growth (ie so-called maintenance capex). For CCC-rated credits, we assume a decrease in capex of 35% YoY with no production growth (ie again maintenance capex). The difference in the expected capex declines needed to reach flat production growth YoY in 2016 favors B-rated assets that are assumed to have a relatively better asset base than CCC-rated companies, and would therefore need less capital to simply maintain production. Page 18 Deutsche Bank Securities Inc. EFTA01097672 13 January 2015 HY Corporate Credit Energy Overall E&P Screen: Results and Ranking Snapshot Looking at the aggregate results of the E&P screen across all metrics we see the following trends: Lower-rated companies in top quartile unexpected: it was not surprising to see more highly rated companies in the top quartile overall (CXO, HILCRP); however, it was surprising to see companies like Parsley (PE) and Penn Virginia (PVA) with CCC ratings there. Looking more closely at these two - they are in some of better US unconventional plays (Permian, Eagle Ford) and thus benefit from lower costs as well as having some combination of reasonable leverage and liquidity over time. The top quartile was definitely more equal opportunity across credit ratings than we expected. Lower-rated companies in bottom quartile as expected: Overall, the bottom quartile with uniformly B/CCC rated companies is largely as expected in our minds. This group of companies has on a uniform basis a combination of higher leverage out of the box, burn significant cash over the next two years and operate at a lower cash margin compared to peers. Safety in numbers: six out of nine E&Ps in the top quartile have large amounts of acreage in the Big Three unconventional plays (Bakken, Permian, Eagle Ford), which have the top cash margins. These types of names would work well for investors as each of these three plays have upwards of 10-15 HY E&Ps that participate in drilling there. This makes it easier for investors to monitor and understand relative performance. Fear of the lesser known plays: four out of seven in the bottom quartile have core positions in lesser tested or known plays like the Miss Lime (SD, MPO) or Canadian dominant portfolios (SEVGEN, LTSCN). These companies could be generally harder for investors to follow with fewer data points observable to the market; this of course could also mean opportunity for those willing to dig in and monitor less ubiquitous data. Unique business models can still screen favorably: There are two relatively unique business models as they relate to HY in the top quartile. First, we have offshore, international E&P Tullow Oil (TUN), which came up as a top name driven by its significant cash margins and solid liquidity. The second unique business model in the top quartile was Hilcorp (HILCRP), which was the only onshore conventional name in the top quartile. This name screens well due to a combination of lower leverage and higher asset coverage. Investors could look at this name and be more comfortable with lower decline rates and lower general maintenance capex, despite the company's strategy of acquiring big and small assets alike frequently. Deutsche Bank Securities Inc. Page 19 EFTA01097673 'Figure 16: E&P Credit & Operational Metrics Screen: Results and Ranking Snapshot Top to IS UQUISITY &Morn IS Net 111P1610 to BOHM 'IS Adj. Cash Overall WORMS NN Da0t 5023.7S MAPS Yorgin Ilb Ranking TOP CRSWe OEP DNR DM EPE TLW DNR NFX FANO OEP LTSCN DNR TINA let EPE XEC HIL NFX NFX FANO OAS ML AR XEC OEP NK cxo PLM DNA NFX FANG OAS PVA PE FANG TUV HIL NFX TLW NIL EPE TLW PE PE RAC CHK X00 BCE/ AEPB 0(0 0(0 OAS EPE /APO PVA PE PVA FANG Bottom Quart* LTSCN AEPB IOL Ski SEVGEN CEP SD HK TPLM WPX PEPS CHIC WPX LTSCN &WO HK SO SEVGEN LTSCN RRC IIPO XCO XCO SEVGEN CHIC SO CHK SAWST SD SAWST PAIR OEP APO SANST SEVGEN SAWST SEVGEN SANST MM RRC LIHR AEPB AEPB 41111I AEPB LTSCN XCO AR MHR I11HR xec SANST XCO IMR Oven PV.10s use IA RBI. HOOKS are theft terry, h LOtattoal diagrams, h major N0l SurPOSIN IOU* mae TNoLch cycle leverage botramng baso doomed. Oman an evaded -30% nabse and most mponant in plays Orma realzaban per art highly tab:do:mean:esin for an01Mr r Dosed° boar o0 market. Is key peril tip data vial er coati delaull rate across BCCC HY 2015. TO the extent hedger/ Cool ineernetelea retallee COSS lop Queue overal but O1 mix cklye higher Methodology Comments nrostors. Of paracular investors The addbon et the energy. laudity gams in a precove 'pude/ and gum play "'Da. malLnlYol an companies Ike Parslay per tat cash mataln ler IMPOrtanCe where each eggel curlrage gaped VS. ckti reasonable meagule °Waft momercum Ocer Overall 0001010 teelCienty CiSlaSI. alter E&P. (PE) and Penn %Monis credt started Ina cOe ale another imp:Aare distance lode/ad,. next year for ESP:. they cap:tatocosts (GSA), & capial IPVA) loth CCC ratrgs are dmenson. roman an imp:Aare tool. strums* (interest burden). more sumnerg. Top ouarb/a ts significantly Our 'aclustce cash margin skews Newer ESN tn lamp Posture for ESP demi:reties more Oly 169%) and datansive some enemas. basic ingght re ESN/ rAllughp.dated Bottom quartile wen Favors EaPs win moremak/a that mom recently termed out aped wowing aganst of lowest cost producers. Robley and core nasal gas mot* dearlylegs uNICIngy SCCC rated WMedOl0wrotimVNbns favored than mom assets and a Naha, %ciPDP RIX balances deed Ot me dawned* Bottom WWII* Interest Wolen could be improved 'nerves KWh DM& companes is Larry as assets. clavniurn M competed asset abOut -55%0aswhere there milk paagIbla regtrutkrIngg. NOR: here aesote dear long mature ESP/ hero figaecled in our mIndg saes. was less lo protect to the way no decreased saw* costs term viablty. Crl cash tie t. assumed. Deutsche Bank Securities Inc. Souro Peach, tbeA meow/toast (IMmboyg!momLP fa rht Mem«, camenes not caveat Or 08 lithe »eV. M, Mmostimees mho 6•TmMg commas mmym any A PER.AA8W.Ch2rANGEPCUSCAUWVA.00ASPEAVA.ROSE.SHS6GEN2A4 MIA(Rwaw WAX EFTA01097674 13 January 2015 HY Corporate Credit Energy Figure 17: E&P Credit & Operational Metric Screen: Results and Ranking by Quartile Top to '16 Liquidity Bottom '16 Net '16 PV-10 to flat BB '15 1.6 Adj. Cash 16 Overall Company Credit Rating ticker Leverage Net Debt 50/3.75 Hedging Margin Mix Ranking Newfield Bat(Stave)138B-(Stave) NFX 1 1 2 1.17 EP Energy BVB EPE 2 2 1 1.33 Hilearn Energy Ba3 /BB. HIL 1 4 2 1.67 Donato Resources BI(Stable) /B/3 (Stale) DNR 3 1 1 2 2 1.67 Tallow Oil B2)B. TLW 3 NA 1 2 2 1.80 Parsley Energy CaatiCCC.(Stable) PE 1 3 2 3 1.83 Concho Resources Ba3(Pos)/BENStable) CXO 1 2 2 3 2 1.83 Penn Virginia Caal(Stable)3-(StaIXe) PVA 2 3 3 2 2.00 Demand Back Energy B3(Posp8kPos) FANO 1 3 3 3 2.00 Bonanza Creek 03(StableyBiStable) BCEI 2 3 2 3 2 2.17 OEP Resources Ba1(StableyBEI.(Stable) 0EP 1 1 1 3 3 2.17 Oasis Petroleum B2(Stable)8.(StaMe) OAS 3 1 1 2 2 4 2.17 Teeing* Petroleum CaMICCC+ TPLM 3 4 3 2 2.33 Halton Resowces Caal (Stable)SCCC.,(Slable) HK 4 4 2 2 2.33 Antero Resources mots:4033B (stave) AR 1 3 3 3 3 2.33 Rosetta Resources BI(Stable)BB-(Stale) ROSE 3 2 2 2 3 2 2.33 Ornarex Energy Bal(Posttive)/88.(Poshive) XEC 1 1 a 2 4 2.50 Range Resources Ba2(Posymb(stabio RRC 2 1 2 3 4 2.50 Chesapeake Energy Bat (PositIve)/B8. (Positive) CHK 2 2 1 4 4 2.83 SM Energy Ba2(Stable)/BB(Pos) SM 2 2 3 4 3 2.83 Exec Resources Inc. B3(Stable)/CCC.i(Slable) XCO 4 4 2 4 3.00 Sanchez Energy B3(PospB-(Pos) SN 3 3 3 2 3 4 3.00 WPX Energy Bat((StableyBS.(Neg) WPX 3 2 2 3 4 3.00 SanaRiage Energy B2(StableyBiStable) SD 4 3 2 4 3.17 bghtstream Resources Caa2(NegWCCC.(Neg) LTSCN 4 2 4 4 4 3.17 Mitigates Petroleum B (StableyCaal(Stable) MPO 4 3 4 4 3.33 Samson Resources Caal (Neg WyCCO(Neg W) SAIVST 4 4 3 4 3.50 Seven Generations B3(PosyCCC.(staixe) SEVCIEN 2 4 4 4 4 3.67 American Permian Caal.tCti AEPB 4 4 4 2 4 3.67 Magner ratstableyetc(neg) MHR 4 4 4 4 4 4.00 Sante. &Vie* cwt campaig:0M enomen Seance Go AnnIaNw ngconvened not cowed:we* AO »Oa the Ocveceste legivenetta Oloarbag contemn/ oweruees any aheEffltalteCaOr0WIGEPLOSMAMRAA.0.0ASPtivalt0SCSeatebteN.Stt TAM12 Wend WPX Deutsche Bank Securities Inc. Page 21 EFTA01097675 'Figure 18: E&P Bond STW Versus Operational Screen Quartile Ranking 1.000 SANST 9.75% 20 • 3.500 3.000 MPO 10.75%'20 • LTSCN 8.625% 20 • aD 7.6% MHR 9.75% 20 1.500 A KM% ' PVA 8 % '20 TPLM MPS% 22 XCO 8 5%'22 • AMEPER 7.375%'21 • 1.000 EPENEG 9.375%'20 BCEI 6.75%'21 SEVGEN &2M '20 • PARSLY 7.8%'22 OAS 6 SN 6.125% 23 • HILCRP 7.62E%'21 FANG 7. • ROSE 5.625% 21 • NFX 6.878% 20 DNR 6V%22 • SM 6.5% 21 OEP 6.876%11 • • WPX 6%'22 • CX05.5% • AR 5.126%ARC 22 5.75% 21 • • CHK 4.875% 22 • XEC 6.876% • Deutsche Bank Securities Inc. 16 2 2.6 3 3.5 4 Son OCViC 0* cancerneres. Marinl'avn Pw rftt khi.wg mrpenerrot coiweci 0v O8 ntin »Oa en forocns Awn mho 6tarteT cont”,t4 esnms ot. AMLPCAAA8CELCAOWIGEPELTSGWOMA600.0ASPEWAROSESHSTWEAESAUPUNIZWonci wPX EFTA01097676 13 January 2015 HY Corporate Credit Energy Leverage Screen We chose 2016 net leverage to give investors an idea of possible through cycle leverage. This is a key data point for credit investors looking at the type of analysis discussed earlier where the default cycle takes three years to play out. The trajectory of leverage over time will be important for possible entry into a credit either before or after a credit event. Looking at the top quartile names, two stick out as being CCC rated - Parsley Energy (PE) and Diamondback Energy (FANG). These two credits have core positions in the Permian, which is presently the lowest cost play in US. This fact comes through in the leverage the longer term leverage numbers of those two producers besides aside from relatively low credit ratings. Looking across the entire top quartile, 50% of the eight E&Ps in that bucket are concentrated in the Permian (PE, FANG, XEC, CXO). Now, looking at the bottom quartile it is important to note where each credit started the cycle; seven out of eight of these companies started the cycle with 3x or greater net leverage, which is relatively high for an E&P. Drilling down further we have a combination of relatively newer E&P companies that were looking to grow into current cap structures post-ramp (AEPB, HKUS, MHR) and more mature companies that had become over- levered and were actively pursuing delivering (XCO, SAIVST, SD). Deutsche Bank Securities Inc. Page 23 EFTA01097677 'Figure 19: E&P Bond STY Versus 2016E Net Leverage ........ 630E SANST !LW> 20 • SSW 3/200 IWO 10.70%10 • 2300 2.1200 LISA% 61,07* OP • 1.500 An 7.w. 'I CO I. TPLM 6 75%72 NEW W 5%11 PVA 66%10 • • MAPES 7.375%71 • 1 Y).6%12 1.000 TLW EPEN 0 4, 17. ALCM' 7.62S '2 525% 70 :stOAS A1 W SN 0. 5%13 FANG 0.646%'71 •20$M Sat RW 22 • DPW 5.5%T2 500 — 126% 21 OEP 8306%11. AR 5.S5% 72 4 4133%73 ' ARC ARC 5.75%71 SW 1005% XEC 5.06%'22 Deutsche Bank Securities Inc. 0.0x 1.0x 2.0x 3.0x 5.0* 6.0x 7.0x 1.06 9.06 10.06 11.0x 12-0x Saircx. 00.exte fink cam", dn. Mantes,hvoce LP to, Ow (oho", cverx0nvs not coact:. Ov 08 2Agn »eV. de forocasts Awes Zhu6tartinv tww•nwegrvrt,s0M,' A PeR.Ail8a1.0X0 fAUGIPELTSCMMHAMPOOASPLPVAROTE.SNSMENSMIPLA(RW070 wPX EFTA01097678 Deutsche Bank Securities Inc. Figure 20: Commodity Sensitivity Analysis - $701$60/$50 Oil - $ millionse.„ IIII:lia Ila RMMO FY16 FY16 Lenny FY16 FY16 rellf FY16 5663.75 $60175 $703.75 $50175 $803.75 $703.75 $50075 $89175 $70175 $603.n $600.75 $72175 $50175 $503.75 $703.75 550 0 39.75 4 16:3.75 $700.75 IFJUktISI CHK Cintp000 Enorg, 154B8 0.10$. 3.874 4278 4.683 3.440 4.060 4.679 154 254 2.24 'Si 324 224 214 04302) 0.2191 18371 3177 11710,141) %EC Cinarex EnvOY 1 / 939 1.143 1.347 EOM 1261 1.405 054 1.0x 1.4x 1.0a 113x 19x 1.0x (Sae) (322/ 12201 0311 13121 1100138 0(0 0:094.11Ncurcof 158B6 0.30$. 1.723 1936 1.948 IASI 1186 2090 1.7X 244 224 2.14 114 224 234 (Ni) ( girl 13091 19451 1807) 1567) HILCRP Hkorp Etergi 3 . 1.021 1.136 1.246 00 1.110 1.20 0.94 2.1x 1.0x i.s, 26x 22x 1.7x 17711 ow, NovAloki 00104634 154i.B243- 1.107 1286 1.456 1063 1290 1.517 212‘ 2.34 1.94 It It 2.14 1.5x 122 290 437 OV etource4 84102. 1140 1244 1951 006 1212 1.320 00/ 1.2x 1.0x 0.0 214 1.4x 1.0x (310)) (23t (1:1!I 123 11 344 9:i (78) RAC Rang. Rasounxo 882/B2. 1.088 1265 1.241 1.075 1205 1.335 2.7x 3.14 2.94 It 3.4x 294 244 (4411 14499 12911 1189) (47) SPA WP SPA Crew B4208 1.173 1210 1.4(0 101 120(1 1.274 12x 2.4x 2.1x 1.0a 4.3x 3.0x 2.2x WPX EA448y Rai/3S. 891 955 1.019 552 714 873 It En 1.54 1.4a 4.4x 3.14 234 1612) 1: 31 4921 :V I 13 70 4 1526) igra16.5.8101 NAPES A/11066111Kft060 CaaiODO. 29% 346 402 193 263 333 NA &Ix 7.54 6.4 17.44 1234 994 0 (474)) 61 (4191 1366) 16741 1604) 1534) AR Moro 7101031760 0738 1.446 1471 1.711 2.021 2216 2412 3.14 21x 1.0x 1.7. 20:4 1.0x 1.7x 18031 17 Er..EI B0116Ii C6* EIX117/ 830. 319 377 231 261 323 39t 134 3.24 2.54 2.2a 424 294 214 C222) 0741 11301 86 DNA Dectory 0:40/0/ a 8108 856 ON 1.000 436 031 072 2.74 4.0x 3.4x 3.0a 8.2x 5.0x 3.64 102 208 274 111 34:0 5(1 01 0) 4 111 59 10 li in6 FANG Damnt/t6 Enorqg B313. 286 352 All 22/2 339 408 14* 214 1.54 1.2a 1.14 12* 0.74 (140) 1821 1231 SPE EP Erent 020 1.60) 1513 1928 1.331) 1.42$ 1.404 304 347 2.0x 2.4 334 3.1x 347 ($461 105 244 203 10:0 EXCORaux4Nas 11/3CCC. 299 313 327 235 2S7 279 32x SU 5.34 5.0* 7.14 7.1* 6.44 „) 101481 12 170 27) 7)) 105 124 FSTO Fared 01 CsatOtC 34$ 361 374 209 234 285 404 7.3x 7.0x 6.7. 14.0x 11.0* 1C/4x 174) (n12 (10 l13 22 16il 0 41 1110.0 Ricca 1401044301 Coalta. 8.41 665 689 572 630 683 4.8x SU 5.54 5.1* 6.7X 6.04 SU 20 35 50 11501 1103) (56) LTSCN JAHR IAPO U91/81/earn Resotecee MaanurnKnot WIslales P4000n. Csa213. CCC Coat% 2$) 103 289 309 125 331 354 146 371 187 105 241 250 $26 207 328 141 354 234 5.8x 354 5.0x 1414 7.0x 4.0x 11.54 6.0x 4.1a 9.84 6.1a 8.3x 168* 0.1x 60* 13.64 7.0x 4.4a KU 67* (40) 171 35 12621 flrol 1441 24 1)2: 11 100 12 02 OAS PARSLY PVA Oasis Poyonum Pane/ 101111 Wpm Mt CealLCCO/ CoollS 766 216 682 039 263 697 853 201 712 429 232 314 558 209 399 667 307 455 2.7* 2.14 28x 3.64 3.3x 214 344 2.8x 2.04 3.2a 2.3a 1.6* 6.64 35x 46* 4.8x 20x 3.84 3.7x 2.1x 324 75:1 74 rs' (20) 0891 11021 11751 1951 (1611 11171 6 146:1,1., 14.1$) (74) ROSE Haat RIN.O.4405 1311313 481 560 639 422 514 606 2.74 464 3.84 3.4 5.34 4.04 3.14 (341) 2681 11961 1581 12 121 SAIYST Samoan Imetareni Csal/SOC 445 495 544 Me 442 620 et 0.6x 0.4x 7.8a 120x 10.1x 600 (r 4s0s))) 40 3 100 2 491 o52021:; :26 EH Sonchaz B30. 387 447 507 272 347 422 1.6x 464 3.94 3.1% 6244 St 3.114 SD Sar451098 EneIY 8213. 646 729 011 387 523 060 3.54 66* 4.0x 4.0 10.0x 7.2x 5.0x /7064,0 i1884 151Vi YE 501101130110611666 9.3.0DG 483 504 545 506 617 726 MA 24x 2.14 1.6* 424 104 234 (1.123) (1.0841 (1.0451 TPLN Tnen2HP41/010.01 Coal.OtC/ 214 225 237 200 217 235 254 4.0x 9.847 3.8a 4.6x 4.2x 30* (202) (1021 0(121 01 (67) (45) TLW Tut0..01"' B213., 1.193 1273 1.354 877 1.014 1.151 1.64 174 344 3.2a St 424 164 (802) (7481 (6081 (1051 (3) 99 Sawed °cyan* fink canowydrea. lIkanitagI4Npnc4. LP to. the (4040//0 cnerponys not cawed Or 061478 //440. .Pht ebrocaststsxwent.ha lAtantrg °maroon 4.,,nort.s.:4*. A PeR.ARSal.CX0 6AFIG6PCL MCA AM1YRA600.0ASPLPV4ROST.Sat$0/00/.$4( TAM 72Wend WAX -o 0 U, EFTA01097679 13 January 2015 HY Corporate Credit Energy Current PV-10 to 2016 Debt Screen Given that derivations of PV-10s are use by the banks to determine the ultimate level of commitment or borrowing base for E&Ps, measuring PV-10 is a relevant data point as it relates to credit investors. Taking it one step forward to compare PV-10 to debt essentially shows investors asset coverage on the current face value of expected debt in 2016. Overall, an analysis like this will favor E&Ps with more mature assets and a higher percentage of PDP assets (higher PV-10); the top quartile reserves average 59% PD while the bottom quartile are just 44% PD. Also, looking at the debt portion of this equation, in the bottom quartile, five out of the seven credits were also in the bottom quartile for our leverage screen illustrating the difficulty of attaining reasonable asset coverage with a levered balance sheet. Page 26 Deutsche Bank Securities Inc. EFTA01097680 Deutsche Bank Securities Inc. 'Figure 21: E&P Bond STW Versus Current PV-10 to 2016E Debt (Asset Coverage) 0,000 amino I ...run. Zu • 3,500 3.000 MPG 10 35%20 • 2,500 LTSCN 8.025%'20 2,000 V SD 7.5%'21 1,500 AgriFt3.70% • XCO 8.5% AMEPER 7 375% '21• PVA 8.5%10 • • HICUS 6.875%'21 ♦ TPLM 675% 1,000 SEVG EN 8.25% '20 BCEI 6.75% 21 G 6.375% 20 . SN 6.125% '26 22 FANG 7.625%'21 lifIRSLY 7.5% '22 tIOSE 5. HILCRP 7.625%'21 • % 2f M 83% 21 . 540 DNR 5.5%Y2 • DEP 6.875% 21 AR 5.125% rxots% 71 ♦• 500 HHC . AEC ' 22 • • ViP 6% '22 . • • CHK Atte% '22 0 0.0x 0.5x tox 1.5x 2.0x 23x 3.0x 3.5x 4.0x &NOY 0017101, S$* cam" , dot MarrenInnce LP ➢7.P.e (000irrev paerponvs not coiwecl Ov 08 1474 VW. Vn towns *row mecca 6tomtwg COrtrAkleMMITAIOW A PER.AIt8a4CX0rAFIG(PCUSCAtinWROMPO.OASPE.PVAROSE.SMSIVOCAtSt(lPthtlOnor. WPX EFTA01097681 13 January 2015 HY Corporate Credit Energy Liquidity Screen Given an expected —30% default rate across B/CCC HY energy per DB's strategist, liquidity gives us a reasonable measure of distance to default. Looking at 2016, allows for a reasonable analysis of how credits would perform FCF-wise though roughly 2/3 of the cycle. This analysis clearly favors E&Ps that have recently termed out RBL balances ahead of the oil downturn or have cash on the balance sheet from recently completed asset sales. Looking at the top quartile, three out of seven top ranking E&Ps in the liquidity screen have recently completed asset sales, namely Chesapeake (CHK), Newfield (NFX) and QEP Resources (QEP). Interestingly, looking at the bottom quartile, there are several credits that have recently completed liquidity enhancing activities relatively recently like asset sales (SD, MHR, SAIVST), IPOs (SEVGEN) and capital raises (MHR). Despite this, these companies remain in the lower quartile on a liquidity-basis due to significant FCF bum over the next two years at current crude prices ($50-60/bbl cases). Page 28 Deutsche Bank Securities Inc. EFTA01097682 'Figure 22: Liquidity and Borrowing Base Analysis at $70 Oil & $3.75 Natural Gas - $ millions 119•14,45404515•41145 242112014 14werng 30.1409~344•33/5(2016 0.44•111~~0.41% 0414444.14111•5414044~1.954 14,44141•451411•444114404 Ws 4:4944411494 lady 5.4444M0 •••• Conffinal 5/11 en% .14042441411) 041 howewcal DC bird ilm WM RC I& Si ~saw %AMP %snot 49 14% % /draws/ urro... 19/ IMO% far 9414454~ 441941404.4 ei as WO Y.vta" art.44.45.440 %%4 0.54415/4 <10.1(14/ I /11945%<(51114140 1410 5/40 %SW >40 51/2 17 Sar $5Y) Sae suss 555 55» 154711 .511/11 151% H<6 n 11% X% 13% ',nil Min a .S4 3" 44% dIN 8 ra , 14451 4.4.4455.04 Canoe, 44%)4444401414/41,19.3471 51.4(0 44710 000 4411 31 1100 15/111 51% 21% IA% K1.41 42% 21% 40% Win Wen% %et% 445 0,44% 5405 9%1 5111 1743 5323 5115 3112 UN 154731 5154 20% 43% 11451 43% 40% WOK VIZ1tftqs 1.59414541450 0 ss sues 0140 1441 3111 1420 111.1171 5139 Wig 11% 1431 25% 17% X% 100 44151•49454.44%. 4,54514 5C 445.540.9 5571 567 5615 5154 526 5275 112%1 51% )541 10% 151101 2106 .71% 10 5041141415444 019.50090400 31.1(0 3933 5910 V. 1110 5121 151.0131 5/33 42% 14% 3314 14% 60% 41% MI 4404154.0 f.I.iu 31.401 51.250 51.60 51.2% 1119 5154 %1141 54» 51% 3% 37% Ulf 63% SI% 4/10 4.%01.44944 11140%/014450491 5140 Mn 109 5793 541 $132 151341 WO CM 14% 5331 13% 11% 44% N. ~Wilts <4457•2451.514/141 5413 1433 5.139 5.0 3114 1141 153141 5514 OD% 21% 5371 47% 10% 35% P PO 1944 C.04.450440 760141/ 19000% 1.1144491•05440 4, , 31230 42100 WV 52501 5415 1..%1 %A 593 553 5320 501 01141 113111 SLIII 5442 40% In IN 44% 51/121 361 1.2% Of II% 194 le% (01 114/ TO44191 NA 54110 $4,50 1LW 5411 % O1Ni 52117 19% 0% 12.117 04% 31% 901 WI 13/149494 %).144414 %NO 14403 51342 11910 $11123 St% 51.300 0031 111% a% Ma $11331 Mt int% 11% AR 494444144auta 450.44.4549/400 $1403 53.414 11433 WOG 53% 51.030 151541 52.0% 704 21% $1.071 LW 05% All %I 0~0 61019 I •Wesn*095.1, 1,11.41 14.303 SLOW 5102) 209 SW 31011 111331 515139 81% 6% 512» 6% 122% 124% It 040% 0 en <44,1.0,131alit 112% 5150 Us Snr Ss» 5% 0111 540 0% 14% 3161 49% 107% Ill% (141 04.54%**New 1.)Pt.r,n1,1.• revive, %LOCO 51540 %AO 51917 31.011 Ks 151.1511 RIM 1121% 0% 534(11 4/14 1240% NM% 111 lanhu tin) a )i$:.•.»., MO $103 $.1:0 $.1:0 Mt 1100 151121 51.014 93% 35% 5714 03% 1(4% 2304 PAC Pap Ill•Went $.)1/14 <,124.7,4.0 14.1:03 54.414 S3033 51.30 % 3250 11310 51.123 901 17% 51/331 014 nt% En WM %LOUP VennwOrk 9 3.1Y4J i IIS1),Scl 5410 WO $9,) WA 52% 3100 15/11 5/41 91% 12% 3621 09% 94% 301 14/1 0954.004%.000 sto,oin (non 5110 50) 140 1.26 303 MOO 11.il 51Y1 30% Ka sus 13% 10% 111% 00 0.1400444.1 IONA% 54.4114Yel NA 41.402 53»50 51.236 31.40 K. 151111 UAW. 9» 0% 521111 1/%4 163% 1(4% III %3v%1 12% 14.303 51100 334% 51143 517 515010 14111 rip or 351% $1131 44% 94% 904 411 4. %.44v1 <4.252•146KCC411/3•11 31450 515%4 SISZO 5704 WI 3450 htl 51.141 /ON X% 1771 43% 144% 113% COS Oa%Prnaun 1)14.21.VigketteI 14403 5000 $1920 $1.145 547 3150 HI 51.491 107% 11% 51.221 Mt 113% 114% 14116 (4%.<4.411445gy Sfin444,951 51$0 >403 5950 SRO In 3211 31*1 MO 11^ %a 900 6% 11% 143% 11101 ILO ibbearnIMaela Cubnkti,VCC Vail NA 54354 31110 50% 54 50 5121 SIM 121% (54 3132 UM LIM Ill% MX ~Ail tapkniCe• 4)l vi JO iSnefol er SLIM SIC $1.177 % 10 5140 515111 Iii Lea SIM) LIM 1344 IX% CM Cuarrfwneuu. 1414.210.40 04~1 31403 51.402 3160 51.175 510 10 5472 51.410 120% Lea SIP) Le% 14.1% RN &saw Dware err 4s:rows/ors 8~9 ~re 0 5 for Sr Mown' MerliTint4 are COVrall Oa MO »eel kb fawns &guns reek« 6bcvnteT co.~ <1,4,110/F1Ot A PER.A A8W.CA12 WICIPEUSCMMOIR 46.0.0ASKPWIROStSMSOICEN.SM 7PlAt 72Wend WPX (II Inaxles~Sty dorm Ras ~my alintonolInteons m aggregate EFTA01097683 'Figure 23: Liquidity and Borrowing Base Analysis at $60 Oil $3.75 Natural Gas- $ millions m Fimmang3srpim/Shallal OW 2015/2016 Anantim SwpWSItortlall over 2015(2016 ns Comm Bono•Ant COMBER Inducing Additions to Sono•Ing Base Na A6Stior4 to 04,roalat Dam R FTE 2016 ityamee4.4 En 16 NM FYI 2016 '8 a 144.44.1% Commlumni MAIL MI Comet raernaNii FCC Bum FTE 16 Ug06ty 68 as %d D944644 ay Lipidity % Tklar CompayNeme NOW Nit AvolobOltyII) Cosh 115 End 13/16 Net UguRIRY %Want Tong UquitIN 55 wren, of Stifling a7 AEPB MANNA, NONNI CoaliECC4 5650 51.000 $650 $550 $50 $255 151023 '5163) 30% 042EI .49% n MAMA Sv.AnCAral.10044 831PlWCCCN%a0ly $480 $480 $410 $480 5085 $520 1$1,884 $201 10% 25% .15% SANST StAmon 3-.venneolCompsCallIND3WM414)/CCEINes Wad' SUMO 52.250 53.000 5431 Si 5500 (5842 592 10% 54% ($3191 (54051 .44% rn MPO NILluat43 P4314304144 0.034614)X4411Dabal 5525 5750 $525 $154 526 $275 ($386 $69 15% 60% ($2061 -45% WM rAZOnAn144nter 9•404/CIPS IBISiatieWC/CiNigi 532$ $760 $325 $175 $212 $280 ($511 $152 23% 42% ($1281 .19% WPX WPB Iner t Bal(Suble1/69.(N.34) NA 53.500 53.500 5931 5614 520) 151,321 5424 24% 11% 5224 13% SO SAMRicia Emig, (321SiatieWII.Diablol 51300 $900 $900 5746 5590 53E 151)21 $538 31% 24% $113 6% Ill NI4pO Emmet ae1/88. 54400 51.250 51.250 $1.249 $336 5150 161,116 5619 36% 9% 5469 27% XEC Omwe4 [Bern 031(Prave)/854(Posilivel 52300 51.000 51.000 5998 5564 5100 (5689 $972 59% 6% 5872 52% NA Nan MoDni4 CaallSiatial/B.1$140141 5438 5.450 5436 $498 $124 5163 ($306 5478 61% 21% 5316 40% Cx0 02.4.00 Rfipta(sE 4333(P43343831Sutoll 53)50 5200 52.607 52.600 599 5500 151,185 $1014 62% 16% 54414 46% XCO EXCO Reourtes 11311taNclICEC•014ble) 5500 NA $900 $789 563 5137 (5363 5627 63% 14% 5490 50% Ls SM ErAnce 632(.54313141, 633(1774) 52,400 53.500 51.600 $1,499 $195 51.100 (9141 $1.1150 66% 39% $750 27% AA 4410,0441.0cfC(4 819001044.91.4444) $4000 59000 51,000 52.93.6 $256 51000 151,091 52.672 71% 2715 $1472 44% ROSE RovetteR44.3.4,44 OII$tatreV0O15ta041 5930 Saco $803 5490 524 5100 (5236 $5715 71% 12% 5478 39% 7P1A1 TriaNORP464.334m CailICCC• 5415 5500 $415 $430 $53 5325 ($249 5620 71% 44% $235 27% OD Chosege4134 Ervev, Gal 04.34i0.0884(400,w) $41300 54,000 54,000 $1,937 55.021 50 152.562 54397 71% 0% 56.397 71% TOW T61104406 52/10 NA 54.750 54.750 52.300 5411 50 (5750 5;961 72% 0% 51861 72% PE Panels C441/CCC•1534164) 5318 $750 $328 5327 $131 573 (5146 $386 73% 14% $314 59% RRC 44444 961.3414.1 1447(Po414513•Dutoil $3400 52.000 52.000 51)47 $0 $250 ($406 $1.031 73% 17% $141 56% $9 94449,4I 440TE 6399999(444) MOO 5300 $300 5300 5596 530) (5312 $554 74% 25% 5384 49% BCD 904.1.124 Crook rowel 831Siatia1/04D49131 $450 $400 $400 $426 $93 $100 (6158 $461 74% 16% $361 58% DIP CEP Resources Bal(Suble1f89, 033031 144 $1.800 51.800 51,7% $1.403 50 ($581 52.618 82% 0% 52,618 32% 144 Haim. Resaace4 E3311114041/CIC•0141e) 51050 53.500 53.050 5704 595 5450 (565 53.151 93% NM 5731 59% FANG Obaloodbaildnagy 8303.341031944) 53540 5600 $350 $320 $41 $225 ($21 $563 96% 38% $338 58% OAS 0444 614/440601 621SiatialtetIke043) $2400 51.500 51.500 51,145 $67 $150 1549 51.313 96% 11% $1,163 16% In EP Meta BM 52800 52.500 52.500 53.549 517 SLECO (5101 52.76$ 96% 35% 51.765 62% NIX No,411440 Embeatta Ba1(543ble).43854Sub14) 144 51,400 51,400 51.377 53% 50 ($22 51.750 99% 0% $1,760 99% 1.7504 tWatuoam Resotacts Ca42110;ACCC4114691 NA 51,150 51,150 5606 $0 50 517 $623 103% 0% 5623 103% ONFI 0en4PyResouOes 6111taNel /55(5$404) 51400 53.600 53.600 53.176 519 50 $215 53.414 In% 0% 51414 In% SN44080.4480344 Sint caw& Sa. 'Montag!owe.LP for St Soong orpows nit cowei Or O8 POO Weld th: &an AgivenoWr Nt%w4a, O cownsusegmacos AtICPOZAReal.C.X0 OLFIGVELTSCMAINRA,60O.OASPLPVitROST.SMSAVERSMTPLAt 72 Wend WAX 011ockas vaetary Across R&e anOity etkAronaodensm e01re3AM EFTA01097684 m r Figure 24: Liquidity and Borrowing Base Analysis at $50 Oil $3.75 Natural Gas - S millions -< 2: n ~Icing Surplvt/Shonfoll over 2015/2014. 'emneleg 54204s/3~11over 2015/1016 g3 ~eat IlarowlneCapecIty tecluding Addltiom to lorrorrIng Sne Na 44ditions to Bonowine Ant 'OUI SO9lJnaS Illeg 04 FTE 2016 incremental FTE 16 Net 'TE 2016 8.02«.21.4 CommIt~ Ara AllOsepm ina~mal Falkeni AI 16 LIquidlcv 88 A5%44 IlquIdIty ee. liquIlxv54 Illas* Awilabllity (II Caf" 911 tamd 15/16 tAtt ~By %33.130.4 Total liquidity 8111«4«.264 615taetINI E :g flik« Cawmay Nam* Rat 5650 5650 $550 550 5255 151148) 152931 -38% 30% 15514. 44% n AtPli Amenian Pannen C481/CCCe 51.000 ISO SANST «Kimte, Petroleum 6-(314ble)/C48115table) Sym% Inwitmem Comp,C4811Neg Wath)/CCC(N8C 9« 553 $10 00 5750 51.250 5525 $1.030 $154 9431 526 52 5275 5500 (5482) (5946) 15271 15121 .1% 60% 54% 15302) 15512) 46% -55% k tn %WEN Sewn Geeennon5 IINPosHOX•15table) 5480 5480 503 $480 512316 5520 152,031) $54 3% 25% 15466) -22% WPX Vin (nem Balreuble1/88.Ineej HA 53.500 $1.500 $931 5614 5200 151,525) $220 13% 11% $20 3% PAMP ainjuim ~or Resourcell315339%)/60Z(Neel 5325 5750 5325 $175 5212 5280 (5560) $107 16% 42% 1517)) -26% SD Saraidge Energy 821Stabb)/8-1Stabbl 51.200 5900 $903 $746 $590 5425 151424) $337 19% 24% (SES) .5% NA Ilikorp C.33493 883 MI« 91.400 53.250 $1,250 53,249 5336 5150 1$1.376) $358 21% 9% $208 32% %E 0133.134% Enormt 851(1%.40.41/118.1Poslov« 5254 53,000 $1093 5998 $564 5100 1$1.057) $605 36% 6% $505 30% Flom ~Au Resourco2 5950 $100 $800 5690 $24 5100 ($396) $415 51% 12% $315 39% 911k69%)/8111.15tab%) PVA Pan %ryk.« 5463 5450 5438 5498 $124 5163 (5162) $423 54% 21% $260 33% Ceali5155%)/13.15tab%) SM le2(«26161/88(PoN 52.400 53500 $1.503 53.499 5195 53.100 151286) $3.509 54% 39% 5409 35% SMCnem CXCI Corcho ~Nes le«PoN/1111.1514ble) 53250 52.500 $2.503 $2.500 599 5500 151.393) $3.706 55% 16% 51,206 39% HEI Sorgen C2e6I ven 1331«etsle)/tHkebk) 5450 5400 5•93 1426 593 5100 (5276) $342 55% 16% 5242 39% PC Cr412CCC.Ikeblel 5326 5750 5326 $327 5133 $73 (5126) $307 58% 14% 52» 44% Pande 6C0 exC0 Resources 11315teble)/CCC.(5146k) 5900 %A 5900 $789 563 5337 (5396) $594 60% 14% 5457 46% CHA 056.34663ke &egi lel Irovw.«)/18.(1%.50Nel 54,030 54.000 $4.030 $1,937 55,012 SO 153,574) $5.385 60% 0% 55.385 60% RRC Ra«,Rosoutcos 53,000 52.000 52.000 $3,267 $0 5250 (1697) $901 60% 17% 5653 43% Ela2(P*0288.15t6034) AR Ant4f0 ~Alt 93/139 $3.000 $3,010 $2.506 $256 53.000 151.396) $2.367 63% 17% 51.367 36% BINUOloWN33030141 SN Sambu (nam, 5450 5300 $300 5300 $596 5300 (5442) 5754 63% 15% $454 38% B3iPoillt-IPotl TtW 7%116401 82/8. NA $4,750 $4,750 $2,300 $413 50 ($906) $3.805 67% 0% 51905 67% TPLM Triangb Petrobum C521/CCC. 541.5 5500 $415 430 $53 5385 (5271) 5597 69% 44% $212 24% FANG Diamomback Enet«. 831P4s1.1161PON $350 5600 $350 5320 543 5225 (5149) 5436 74% 38% $213 36% CUP OUI Resource, lel(Sublelffle.Isteme) to. 53.800 $1.930 $3.796 51,403 10 ($2348) $1.350 73% 0% 52.350 73% HOI Ne«4«61 Explonmon lel(kuble1/1388-(5«flel HA 53.400 $1.400 $3.377 5396 10 (406) $3.368 77% 0% 51.363 77% LIX% Ughbutom Nesttun«, C2421Neg,VCCC..(Negl HA 53.150 $1.150 $406 SO 10 (593) 5513 85% 0% 5513 83% 045 CoNs Petroleum 621ketk)/1145t4bk) 52,000 53.500 $1.500 $3.145 567 5350 (5191) 53.171 86% 11% 511/23 73% I« Nokon Resowm C4811544ble)/0:C•1501:441 512360 53.500 $1.050 $703 595 5450 (5329) 53.119 90% 36% 5669 54% ON* Otnbury Rex4.963 11115tabk)211111544618) 51.600 53.600 $1.600 $3.178 519 10 ($97) 53.101 92% 0% 51.103 92% F.PE EP Erm«. 82/8 52.500 52.500 52,503 $3.849 $17 53.000 (5167) 52.699 fl % 35% $1.699 59% .59/4w 0933$014 8~ ~arr/SA «tren fan C« falne kawng~menns nz• co...falbyOS nr~ the bacon Ferneene~ 6~9 CON.,,WIC~,M1" , AMCPCR.AR.BCOXXCVANO.M.LTSICAMMt4.0.0ASKPv4ROSCSIZSWGEN.SACIPtAt 72wano WPX Ill Inc!~ ~~1y Klan ABU anditny aktirawl ~eie en~fløte. EFTA01097685 13 January 2015 HY Corporate Credit Energy Hedging Screen Hedges are short term in nature and most important for 2015 cash flow. To the extent hedges preserve liquidity and operating momentum over the next year for E&Ps, they remain an important tool and differentiator. In particular, should the commodity cycle snap back more quickly than expected, those with hedges that afford more growth-driven capital programs in 2015 can carry that momentum into 2016. However, those E&Ps, which have made more drastic capital cuts, will have more ground to cover in terms of ramping production back up to reach optimal efficiency. Looking at the top quartile, one can see higher cost E&Ps protecting against down side (DNR, HK, MPO) while other E&Ps hedged oil price risk out of recent acquisitions (HILCRP in Alaska). The top quartile is significantly more oily (average: 65% of production) and seems to have been more defensive about protecting against oil downside. On the other hand, the bottom quartile averages —55% gas production and given the performance of gas recently, there was less to protect in the way of cash flows there. Page 32 Deutsche Bank Securities Inc. EFTA01097686 'Figure 25: E&P Bond STY Versus 2015 Hedged Production Levels 4,500 4,000 9.76%28 • 3,500 3.000 MPO 10.76%20 • Z500 LTSCN 625% '20 2,000 • SD 7.5% '21 9.75% 20 1,500 •XCO 8.5% '22 • iKUS 8.875% '21 AIMPER 7575%21 TPIM 6.75% •'22 PVA 8.5* '20 • • • 1,000 W11% '20 SEVEIENt825% 70 Roe .75% 7* SN 6.125% '23 EPENEG 9.375%20 • FANG 7.625%921 OAS 6.875% 22 • PARSLY 7.5%02 ROSE %645%21 NIX 6.875%20 DNR 5.5% '22 OEP 6.875% '21 • AR 5.125% '21 • • 500 *CHK 4.875% '22. W 6.6% '21 .S .mii p i c 6- ILCRP 7.626%21 %EC 5475%22 • • • COCO 6.5% 73 RRC 6.75%1 0 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0'' Sane Otweren• OveA mnowydot &barb.ghvoce LP rftt kalu,,ng reenoon not cowee Ov 08 fl YASI de lacuna Awn TRW lOxertag congman PCR.AR.8CO.PCOJAVO,(PCLISOVAMAMPO.OASIT.IVAROSESIKStVGEItSkTPLAt Mgowl 'VP% -13 O y EFTA01097687 -o Figure 26: Hedge Ratios by Revenue - 2015 (top) and 2016 (bottom) 10 0 100% 11111111111 r‘ 80% xx 12% 34% 1st! 33% 34% 16% 28% 14% 16% 32% 31% 33% 60% I 1 65% 2i1 40% 20% 0% I aR wPx ! SAM! SD 'CO ONR M[ W 1161 UPS FWG {TICK NM I U R WA ROY 4N 1t WIN INA 151 -20% • Gas - Hedged u Gas Unhedged • Od - Hedged Oil - Unhedged 100% 1 80% 60% 40% 20% 0% • Gas Hedged Gas Unhedged • Oil Hedged • Oil Unhedged F P m &wee Orotscnottsmt conweIaOra. OlcornixegInner LP toe Inebnowngcoenoonns n cowedby 08Mr nett sly fireceirs *gores plea Obanerg consanto evaares ern?. AMEPERAASCO.O12, AN0SPLOW4IAYR440O.OASPEIVAROSE.SIKSEVOPOUTPLAtaVione WP,C EFTA01097688 13 January 2015 HY Corporate Credit Energy Adjusted Cash Margin Screen On the revenue side, locational differences in major plays drive realization per unit. The cost side of this metric incorporates relative costs given play type (at current levels), maturity of an overall portfolio (efficiency gains), corporate costs (G&A), and capital structure (interest burden). Our "adjusted" cash margin (includes G&A and interest costs) will skew other basic insights into the more intuitive lowest cost producers (i.e. best base assets). Additionally, we would note that relative interest burden could be improved with possible restructuring or distressed debt exchanges leaving solid assets in a better place to perform outside limited capital structures. Important to note, we have not incorporated decreased service costs across our models despite recent announcements from producers about 5.15% deflation with more likely to come. We believe this is more conservative especially as the service costs will move down slower than the immediate decrease in oil prices. We think looking at cash margin in conjunction with play-by-play breakevens is a valuable exercise. See Figure 27 for our equity counterparts estimates of breakeven oil price for an IRR of 10%. IFigure 27: Breakeven oil price for US onshore unconventional plays illinons CO Pea kre 10% MI /0,74/10//247/ (7,0111,01/20W/e, J./ // cip SONCO" ONISCAS. tom),*am.en Deutsche Bank Securities Inc. Page 35 EFTA01097689 'Figure 28: E&P Bond STW Versus 2016 Cash Margin - 8/Boa IL /IV* CU • 3.600 $•8e— MPO 10.76%20 • ac00 LTSCN 8.026%'20 2•00 • SD 7.6% MHR IlliS --- ---____ vr.n AR% '0, • HKUS 8.876%21 AMEPEP 7.376%31 PVA GS% 20 MIA 76%'22 • • lye W 6% 20 SEVGEN 8.26% 20 SCERISINLA3120 • ty .126% '23 HILCRP 7.625% 7l POSLY 5% '22 FANG 7. .21 • *ops 6.875% 22 • SM 6.6% '2 .G46.875%21 660 DPIR 5.5% 22 CX0 SA% • RRC 5.75521 AR 5.125tw22 px g/14, 2 240SE 5. % 21 NFX 6.875% 20 • • • CHK 4.875% 22 XEC 6 %72 a I 45.00 $000 $600 $10.00 $15.00 22000 226.00 13000 $35.00 $40.00 Deutsche Bank Securities Inc. Sawn, °cum*. 8seA <WIPP./07)(8. Stanteg fence LP fa' rftt Mgvry aP.wnei not ca,reci 0v Oa fly* »et,. de forocasts Awn mhG 6tomtwg °Gwen, egmoms au?' AMCffRARBLYLCROF AIGLPLOSVUMR4600.0ASPLPMROST.SASO/CENSMTPLAtRiVare wPX EFTA01097690 13 January 2015 HY Corporate Credit Energy 'Figure 29: Marginal Costs FY15E Sel sn G&W nrM $31. I ill $34 3 ' tam' 521 =J a in' 71 1 (11 = = AM II I 1 (11 1111H II I II T ill I ,fro t•il• e te g +t el . °P ette 4009 /.0.,#4e sirtee+ 4 ," Santr Dances. ent cameo/ Mat Awning Amore L. For ern tabs., concentv not convect by 08 MO field rho broom; Sum renxe 61bombog ccneenws nummos AMEPERAIC8C0.0c0.0WaSMLISCWAYAMPO.0.41PESVAINXIEStatWEN.SACIAMTLIN and WPX 'Figure 30: Cash Costs and Cash Margin for FY 15E Oily La easily tN j mai IRO t== So mo ,fr 4. neeetko ste,,, efr # <et ea 4.* •Total Calk Cost • Cal Mania Rai:talon Soured DAirlth0 &WA alsaary SKR @barite'? FnMCO tP far IMIOAbworlg.COMpas au Sank2by 08 Stra mot um, fordalista 4tunis. WWI BbOograrg conamsta Ofidethifila ony. AMOMARSCROC4MPASEPELTSCWAYRAMCWASP{PVAROSEMSEIGEMSAt IRA( YEW ma iMPX Deutsche Bank Securities Inc. Page 37 EFTA01097691 13 January 2015 HY Corporate Credit Energy 'Figure 31: Marginal Cost FY16E Oily SW Gassy NO wY P al G MO 0:=1 = naN cm tie Si, 40 e s00 P # t yP #'• es' k e,- teen t ee Saae &View &at coma", dara 61b:mbegIwo*, L. "'rely foMmongconvened not cowed Oa Hect the brown eguees #w1Aborbelt coweasto <similes <et NAPERAlteCOXAVANGEPLOWKWYAMPO.OASPEPVAROSESPYMCEN.SWIPLAIlLin•nci wPX 'Figure 32: Cash Costs and Cash Margin for FY 16E Oily 106 00801, ws Yw Nnurl II I • Total Cosh Cal Cosh Mays ftMibliffill• Source Dam". &Mk ainuliMy ara BbombegPanto LP For No fol.bwow compas no: convectby DB lfpf AWL es foneasta Vann 'eta Erb:rotas; conantius a:WiltTINS OW ANEMIA,I.SCE).0,4FAMEPCLISCA(A4YRAMCIOAAPE.PVAROSESWEICEMSRIFILMIEW end WM Page 38 Deutsche Bank Securities Inc. EFTA01097692 13 January 2015 HY Corporate Credit Energy / Commodity Mix Screen Despite bear oil markets, we still see oil mix driving higher per unit cash margin for the oilier E&Ps, especially a credit like offshore E&P Tullow (TLW) with significant assets in the development stage. We concede, in this analysis, E&Ps with long-dated and core natural gas reserves screen poorly here despite clear long term viability. For example, RRC, AR, and WPX are screened in the bottom quartile here despite roughly BB ratings. Deutsche Bank Securities Inc. Page 39 EFTA01097693 'Figure 33: Hedge Ratios by Production - 2015 (top) and 2016 (bottom) m to 21% 19% 22% OM 36% 36% 35% a -2 42% 39% 41% 4914 • 39% 48% a % 39% 45% 47% a; 8 57% na 1 tn I i I I I I I OK I WS As OM I • (KO Iftli MPS IMX) LISCH MK* I IMI Pt PAL I Mutt fn 1 . ! • Gas Hedged Gas Unhedged • Oil Hedged Oil Unhedged 100% si 52%P. IIIIIII III I II • • 90% 80% 35% 34% 42% 70% SS% 60% 50% 40% 30% 20% 10% 0% I Is LIM SA. SO • Gas • Hedged Gas Unhedged • Oil • Hedged Oil • Unhedged Deutsche Bank Securities Inc. Sawn Oeyesok Link co.nowydwa. (Mwritatp Inn. LP t0( MploPoiwy reerponvw.x copycat)), OP WthineW me knows Awes WP:a Spa leg cwwww, °women OM' A PCPAP.8CO.CXXWANO.LPEL ,SCAMMUPPOOASW.PWIROSCSKSOICEN.S4(1•111112wand wPX EFTA01097694 13 January 2015 HY Corporate Credit Energy Conclusion: E&P subsector — maintain Underweight Keeping all of the preceding in mind, we believe investors should be underweight the DB HY Energy E&P Index, and maintain this recommendation. Last year, the DB HY Energy E&P Index was the worst performing sub-sector in high yield. HY Energy was down -6% for the year, which compares to overall HY being up —3.5%. In particular, we see little room for E&P subsector outperformance as these smaller HY credits can't really continue their aggressive growth strategies of the past as they try to make a path to neutral FCF. In short, we believe these credits can stay in and around FCF neutral but with little opportunity to expand the asset base and delever. We expect the best they can do is survive and reach the other side of this commodity and credit cycle. In particular, we see more value in the "higher quality" El/CCC credits like Halcon (HKUS, BUY-rated) and EXCO Resources (XCO, BUY rated). Given this lower-quality bucket has led the way down in energy, we believe upside/downside is more positively skewed there. We understand the natural tendency is for accounts to reach for quality in the BB area. Our concern with this strategy is that these names have outperformed thus far. We worry that if HY energy credits take a step down due to seasonally weak oil in 1I-I 15 that these names will take a disproportional hit. Therefore, we suggest that accounts stay in the BB-rated credits with upwards trajectory related to possible M&A like Cimarex (XEC, BUY-rated) and to development of new higher margin plays like Newfield (NFX, BUY-rated) in the SCOOP/STACK. We believe both of these credits still also have IG upgrade potential even in this market. Lastly, one of the most important reasons why we are maintaining our underweight stance is driven by our suspicions that early 2015 fundamental weakness in oil will mean that investors won't "miss the trade." Despite positive data points around slashed capital budgets from many HY issuers and even selective capital infusions (LINE/BX), we are moving back towards the energy sector wides seen in December. More specifically, looking at LINE bonds, which were the direct benefactor of an effective capital infusion from BX, they are trading at pm-funding announcement levels. In our minds that means the market isn't giving much credit to that increased liquidity either because there's a perception that more capital is needed or on a macro basis, that we just aren't there yet. Deutsche Bank Securities Inc. Page 41 EFTA01097695 13 January 2015 HY Corporate Credit Energy DB Price Deck and Commodities Outlook The current DB commodity price deck and outlook are summarized below, as presented in our Commodities Weekly (published January 09, 2015) and our Commodities 2015 Outlook. IFigure 34: Deutsche Bank Oil & Natural Gas Price Forecast WTI- Brent WTI Brent Spread Nymex Gas WTI/Gas USDibbi) USD/bb0 (USD/bbl) (USD/mmbtu) Ratio 2013 98.01 108.74 -10.73 3.72 26.3 Q1 2014A 98.61 107.87 -9.26 4.72 20.9 Q2 2014A 102.99 109.76 -6.77 4.58 22.5 O3 2014A 97.25 103.46 -6.21 3.94 24.7 O4 2014A 77.00 80.00 -3.00 3.85 20.0 2014E 93.96 100.27 -6.31 4.27 22.0 Q1 2016E 52.50 57.50 -5.00 3.90 13.5 Q2 2016E 52.50 57.50 -5.00 3.75 14.0 Q3 2016E 55.00 60.00 -5.00 3.65 15.1 Q4 2016E 57.50 62.50 -5.00 3.70 15.5 2016E 55.40 59.40 -4.00 3.75 14.8 2016E 65.00 70.00 -5.00 3.90 16.7 2017E 70.00 75.00 -5.00 4.25 16.5 Score. fleombem(wow LP. Orenvene &w* US Natural Gas - Production Cost Declines Promise Weaker Pricing Production cost declines in thermal coal and US natural gas mean that oversupplied conditions in these markets in 2015 will likely lead to further downside. In thermal coal, lower costs have been achieved through reductions in workforce, renegotiating mining contracts, cutting fuel expenses, reducing strip ratios and postponing sustaining capex. We expect weakness in producer currencies and crude oil to translate into further cost declines, although this could be offset by a partial rebound in other costs. Limited deviations from the longer term trend in supply growth matched against new signs of demand weakness suggest that oversupplied conditions are likely to continue and that declines in dollar-denominated costs may be a guide to future price developments. We lower our 2015 price forecast for Newcastle FOB to USD60/t and Richards Bay FOB to USD63/t. Production curtailments remain limited, despite the Glencore shutdown of Australian production for 3 weeks in December (-4mt). Furthermore, any idled mines will be available for restart in the event of improved market conditions, limiting the potential upside. Page 42 Deutsche Bank Securities Inc. EFTA01097696 13 January 2015 HY Corporate Credit Energy In US natural gas, estimated development breakeven costs (excluding finding costs) have declined by roughly USD0.60/mmBtu in the last year owing to well cost reductions, more extensive use of pad drilling, and increased numbers of wells per pad. Production growth has recovered sharply from freeze-offs in November to average +4.3 bcf/d yoy. While we expect this growth to slow to only 2.0 bcf/d yoy in 2015, we believe the market would be balanced at only 1.3 bcf/d yoy growth. Therefore we expect storage normalization versus the 10-year average by the end of March, and building surpluses over the remainder of the year prior to Winter 15-16. Consequently we lower our 2015 Henry Hub price forecast to USD3.75/mmBtu. Overview Production cost declines have characterized both the global thermal coal and US natural gas markets in the past year, with further USD cost declines likely in thermal coal. We expect oversupplied markets to persist over a multi-year period in thermal coal, and over the whole of 2015 in natural gas. Consequently, lower costs of production translate into a lower likelihood of supply curtailments and greater potential downside. Natural gas supply growth raises oversupply concern An extremely cold winter in 2013-14 ended with storage gas at the lowest level in both percentage terms and absolute terms since 2003. As in 2003, this was followed by a very strong injection season with 2,770 bcf (59% of working gas capacity) added, as compared with 2,491 bcf (61%) in 2003 when measured from the end of March to the first week in November. This was facilitated by the strongest production growth rate (+3.1 bef/d) of the last nine years apart from 2011. Of particular note is that production growth accelerated into the end of the year, despite the weakest pricing also occurring in Q4-14. 'Figure 35: Dry gas production growth and Henry Hub 'Figure 36: Dry gas production (bcf/day) g Jan to Nov prod. growth 74 (bcf/d yoy) 2012 8 o Henry Hub Avg 72 . 2013 7 0 0 ($lmmBtu) 70 - -2014 6 Forecast A 5 68 November O 0 /-% freezeoffs ympsvti v 4 0 0 to, 66 3 I I ,_ i i 64 11 2 I I 1 I I 62 i I 0 60 l l l l l l l • . 2006 2008 2010 2012 2014 \,) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Sowre. Abcogorp (wore N. Benin Conn. 08 Mequiy flosowch &wren 00,1104 CrIfe9y, Oeu:selhe 96N. Continued strength in production growth poses the greatest risk for pricing in 2015 and we lower our price forecast to USD3.75/mmBtu on expectations that supply will exceed requirements in a normal-weather scenario. A shift towards lower costs has been facilitated by tighter well spacing and longer laterals, while we do not expect reduced drilling for tight oil to detract substantially from associated gas production growth. We expect these costs to remain lower in 2015 versus 2013. However, a continued backlog of takeaway capacity in Northeast Pennsylvania may hold back growth below what it otherwise could be, owing to negative basis relative to Henry Hub. Deutsche Bank Securities Inc. Page 43 EFTA01097697 13 January 2015 HY Corporate Credit Energy 'Figure 37: New drilled gas supply breakeven 'Figure 38: Dominion North Point (USD/mmptul 5 2013 2015 2014 — Horny Hub 4.5 • 4 Dominion 3.5 - 76 A North Point 5 E 3• 2.5 • 4 2 3 - 1.5 • 2 - 2 4 6 8 10 12 1 lactid Jan-14 Mar- I 4 May-14 Jul-14 Sep-14 Nov-14 Sam' Wood 'Wayne.. Deutsch: an &km. blovenbegMora tei. Data's tar* On a year-on-year comparison we expect lower demand from normalized winter weather to be offset by growth in power utility generation demand and industrial demand. Winter-to-date weather has been quite close to average in cumulative HDDs, with generally mild weather being offset by a pronounced cold spike over 12-21 November. This cold spell also triggered freeze-offs but a retum to mild weather resulted in a quick resumption in production to the highest average of the year at 71.5 bcf/d in the week ending 5 December. Figure 39: Natural gas supply & demand (yoy change) 'Figure 40: Storage as % of working gas capacity 2.5 Supply 2.1 Demand 100% 4135 bcf 2 90% 1.5 80% 1718 bcf 70% 0 0.6 60% ` 0.5 50% v 0 2 -0.5 0 os -o co A.% : t To c 8 40% 30% 10Y Range (%) 3 0 .... O. .., 5 E — 10Y Avg (%) -1 8 20% 2014 -1.5 . 0 10% 2014 Forecast 2015 Forecast -2 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Soso t600I./0A. Otvascne AM Sawn. OS COCICK &tante Conk Overall we expect that the market could be balanced and restore normal storage levels by mid-year if production growth averages 1.3 bd/d yoy in 2015. Consequently, our forecast of 2.0 bcf/d yoy growth implies normal storage achieved by the end of (11, and building surpluses relative to the 10Y average (measured by the percentage of working gas capacity) over the balance of the year. Therefore we lower our 2015 forecast for Henry Hub to USD3.75/mmBtu with downside risks over the summer in the event of more aggressive production growth. Page 44 Deutsche Bank Securities Inc. EFTA01097698 13 January 2015 HY Corporate Credit Energy 'Figure 41: US natural gas supply and demand (bcf(day) 10 20 30 40 10 20 30 40 Bcf /day 2014 2014 2014 2014E 2015E 2015E 2015E 2015E 2013 2014E 2015E 2016E 2017E CONSUMPTION Residential 13.6 28.8 7.4 3.6 15.8 13.9 24.9 7.2 3.7 15.8 12.9 12.9 13.0 Commercial 9.0 16.5 6.2 4.7 10.3 9.4 14.4 6.0 4.6 10.3 8.8 8.8 8.8 Industrial 20.4 23.0 20.0 19.8 22.4 21.3 23.8 21.0 20.8 23.1 22.2 23.1 24.1 Electric Power 22.3 19.7 21.0 26.8 19.7 21.8 19.9 21.8 28.3 20.5 22.6 23.3 24.0 Other 6.0 6.8 5.9 6.0 6.3 6.2 6.8 6.1 6.1 6.3 6.3 6.4 6.4 Lease and Plant Fuel 3.9 4.0 4.1 4.1 4.1 4.1 4.2 4.2 4.2 4.2 4.2 4.2 4.2 Pipeline and Distribution 2.0 2.7 1.7 1.7 2.1 2.1 2.5 1.8 1.8 2.1 2.1 2.1 2.1 Total Demand 71.4 94.7 60.4 60.8 74.4 72.6 89.8 62.1 63.3 76.0 72.8 74.5 76.3 YoY % change 2.3% 7.4% 1.3% 0.0% -3.3% 1.7% -5.2% 2.7% 4.1% 2.2% 0.3% 2.3% 2.4% DOMESTIC SUPPLY Alaska 0.9 1.0 0.9 0.9 1.0 0.9 1.0 0.9 0.8 0.9 0.9 0.9 0.9 Gulf of Mexico 3.6 3.3 3.4 3.1 3.1 3.2 3.1 3.1 2.9 2.9 3.0 3.1 3.2 Other US 65.7 67.9 69.6 71.0 71.1 69.9 72.1 72.5 72.6 73.0 72.6 74.1 76.2 Marketed Production 70.2 72.1 74.0 75.1 75.1 74.1 76.2 76.5 76.3 76.9 76.5 78.1 80.3 Dry Gas Production 66.5 68.2 69.8 70.7 71.6 70.1 71.9 72.1 72.0 72.5 72.1 74.0 76.2 YoY % change 1.2% 4.2% 5.3% 5.9% 5.8% 5.3% 5.3% 3.4% 1.8% 1.3% 2.9% 2.6% 3.1% Net Storage Withdraws 1.5 22.8 -12.7 -13.0 1.0 -0.5 15.6 -12.1 -10.8 1.7 -1.4 -0.7 -0.2 Other & Balance -0.233 -0.2 0.6 -0.1 -1.0 -0.1 -0.9 -0.2 44 -0.2 -0.5 -0.5 -0.5 Total Domestic Supply 67.8 90.8 57.7 57.6 71.6 69.4 86.5 59.8 60.8 73.9 70.2 72.8 75.6 LNG Gross Imports 0.3 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 LNG Gross Exports 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.4 0.6 0.3 1.2 2.2 Pipeline Gross Imports 7.6 8.4 6.5 7.2 7.2 7.3 7.8 6.9 7.4 7.4 7.4 7.4 7.4 Pipeline Gross Exports 4.3 4.7 3.9 4.2 4.5 4.3 4.6 4.7 4.6 4.9 4.7 5.0 5.3 &tom 16 00E4,4 Dusias SAM Please refer to DB's Commodities Outlook published on December 16, 2014 for the more detailed discussion on our commodity outlook. Deutsche Bank Securities Inc. Page 45 EFTA01097699 13 January 2015 14V Corporate Credit Energy E&P Relative Value and Comp Sheets Figure 42: Industry Relative Value XWN4MOYl8 Films** Redonse1940 1“ E;112~EUIDIESEZEUEEELMEMOEILICSEMIMEMEICEIELEIEDIZEIEBEI9nmazia ~4.46EtirgyP4ifn I17 223 217 453 756% 128% 694. 77 14 252 NM 92% 704. • • 2.149 2816 3.44711403744 955 1.688 1923 2.729 122% 95% 42% 647 3085 1.506 130% 85% 41% 5 II 12 2.079 3994 4916 B4.4434. ONA 411 558 563 577 n% 42% a 211 383 346 82% 36% .108. 181 509 638 1.018 Cnw9tlu 17.279 16975 19.476 18266 47% 13% .18% 5,063 4225 4.09) 33% -17% a 837 4.713 155 . 1 13.291 11.569 11,649 Cmn. 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EFTA01097702 13 January 2015 HY Corporate Credit Energy 'Figure 45: Industry Relative Value Reserves , µAV Conway MitSMIMISMIlaiSSIEMElaaaMillaaafIESES • NO • 14 721 910 2 700 14.64% 4271% 641.4% 4270% '4% /10 NA 1.00 206) 203 6614 4330 2642 5196 116% 11937% 2615% 4007% 15% M% 72% 201 I43 193 11$ 316 410 1221 193% 374% NI% 941% 37% 33% 54% 8 1940 100 1746 1216 MOM 16171 21.701 260% IP% a 136% 10% 12% 32% NA 1.09 1.05 460 MR 2259 2.417 6201 310% 202% 310% 224 16% 02% 20% 71 '@4 I.= 1262 1.06 2.461 3.014 9/03 408% INS 244% Min SD% 36% 48% 126 1303 OW 114 079 2.456 2810 10104 4934 310%. 326% 161% 21% V% 34% 173 74 160 167 202 241 342 1270 1601% 1313% 433% MI '4% 16% 63% 1.09) 1.106 1431 2.191 301 3245 1130) 204 3)11.. 06% 0% 61% 74% vs NA 172 IS I? 347 IMO 1.124 14 MI6 0% OVA aro ON 10% 34% 02 937 Oa 425 211 6363 625 743 ISM 121% 10% 129% 67% 71% 34% NA +.0701 P4.00.7ta XI 39) au 440 453 BA 2.770 2711% 615% aaaa MY 19% 0% 64% NA 04:40 (nap 1.03 113? 711 118 1.164 2275 7•424 2486 MK MM 32% 4.6% So. 34% NA 44.0un Para Paeonn Si 291 177 464 434 456 922 130 i7.4. 10 17% 33% SI% 36% IU 114075.00,0040.an IR 222 316 4/4 ISS 747 LON WM% 727% 629% MI 31% V% 62% 106 xt.2 t23 17/604170 1.712 1.937 1.007 1.523 3319 2.450 60)0 192% CR% al% 10% 82% 46% 44% 126 Custfartsan NO IS MO IIM 160 1214 JAI 14:31 7M% 671% 411% II% 13% 40% 116 69 la 76 168 437 22/ 731 1374% 1404. NC% MR 22% 24% 57% P•nn y run% 252 330 XI 410 NI 914 1.717 11% 399% 71% MI 00% 36% 60% 144 1112 215I IRA 1164 3136 4440 6012 141% 115% IS% 111% 10% 14% 41% Rana Hanna Ida 4160 IONI 4.010 4406 3202 7933 al% 412% 114% 811% h% a% IPS 100 0:74774 %WIN 446 542 AI 1.129 071 3162 1.74. 020% at% 402% 42% 40% 61% 116 Sanaa I.301 ERR 707 0 204 6117 2/15 2(4% 4% 253% 4% 0)14 67% 34% NA 4.4.40431.0.4 I.µ9 IMO IMO 131 3316 2101 6.191 NO% 201 550% 146% 42% 03% 34% la 3.4 Eat 10 1.20 762 1.316 6341 2172 SSA 170% 60% 369% 414% 47% 46% 41% 240 SW= EaNY 22 MI 105 204 127 352 1.165 MO% 435% 3333% 439' 12% II% 61% NA lead KA NA NA NA 2.346 2141 paa 2 771%. 344% 10% 12% 14% NA la Tao* Peakua M Itit 0 146 a 241 134 2111% 00% 2746% 1019% 14% 11 40% NA 'WS% Eneew 2.703 2771 1799 1144 4.01 4'42 4363 49 101% 97 '5% 7 I 42% 402 714 10 342 50% '9% 71% .35% 0% 9% 4344 Mal lag 014 26460 3.07 27•10) Val% 4270% 6540% 4172%. 93% 90% MY 01 1.10 1.471 1161 1.141 1241 1007 4.112 1032% M.1% 403% 102% 06 436 41% 120 a6 ai 679 740 0761 1057 3202 34.9% MI% 336% XS 42% 40% 41% al 0440144/ 000 r3= I MUialanZIS=MlaCalaiiianialaatla • 0. 7770, NIP NW 10 0 /a HA SOS 1002 100 SOO 51.06 51.40 5103 1410 1030 10 MD 6145 10.76 0,......LoSak. 1007 1110 1161 00 1050 5122 032 1191 92.19 0.41 006404.0.0174,7 $1.06 51.41 $122 1067 100 UM 110 6223 1471 1 Crolfil4 Crew 1024 1041 1046 1020 1033 1037 1,414 9191 140 100 Rsoutes 31.67 SEM UM 100 $1.14 610 NM 140 037 040 0408/04.04. SIN 1216 1191 017 1132 1377 12.42 033 9333 1131 cora. 500<eXpt 1232 NM 1216 SEM 100 1121 40.11 11.16 MOO 1039 11 174.7/ NA 1262 SS 1M 1122 $'23 SIM 12 42 9042 10.43 Goalanns• ha 31.91 31.61 1168 51.42 1134 11.42 310 120 1171/ 11 icea 04 1113 1190 614 $014 1137 SIM SIM 11 75. 6116 SI lea R1341/144 1262 MM M72 510 /321 13 1323 1395 1112 14.1 Nan Ermsn IOW 051 MO 033 033 9034 • NA 9101 170 lartn,117707 Rastas tan 1341 002 11.04 1243 $123 6133 1113 $9.11 10 140,03004vn $147 1616 ISM 41.40 SIM 1222 12 49 12 74 450 Waal DO)rake, 6141 11.70 II 91 1077 010 $1.0 110 11 76 1032 10. INS.. 1172 1263 106 MAO 11M 61111 12.4 $421 1032 009 40 MIR 2204 OM 002 014 $131 03 70 105 $241 44 Pan 900 MM 1211 MN 100 4037 11 1124 1226 1117 1161 CEP AMU,. 9126 1762 SIM 0.44 1011 90.71 5111 1161 416 470 1147041.4auta NM 1093 WS 6.30 10.44 1031 $136 1204 1010 R311w 9112 1092 1272 ION 1034 9010 123) 1247 10+7 10. 84•0441 M46 MN UM 51.14 41.73 1111 11.73 $131 1127 *4.2 11 Svc/am Elan 1204 1214 1191 11.03 1127 1113 3,394 1137 93.74 Vaal/ 31.1? 31.44 31231 MOS 10.4.1 1036 1643 1270 1037 1060 5.1744.71Erew NW WM UM 1000 000 SIM 1427 070 10.00 1060 Tan 01 NA NA NA 1117 1017 9019 SIC 174 NA bunk rdlall117 1060 3411 UM 11.01 MN 11.42 1131 317 SOM. 101 1,77% Eno* KIN 1166 1394 Pi 70 1034 NM 9311 SOS SCSI 100 Mn 9112 9112 $202 MOO 1691 MO 40 71 5070 69 00 SAOj , an um 0232 13/3 2320 $4S9 7723 PSI $1.46 Ilan 51.32 sl4 1233 Mat Ma 6111 6016 161(0 107 1 We 1121 .1.10 1224 14177 MIS 1121 1112 12.41 IPA Ilk Sane' Comma",'Wet 0,00evesele aµot £uMml *bombe, tow c LP £6r 00 700406790304110141704 comae 6P MAP, 01.61 sly beacon's towel 'OWE ithambep consensus to onY: AMEPERARSCO.Or0MPI0IPELTSCIOANALIP0.0AS.PI.PvAR0SE.StStkaN.SUIPLAtin am, wPX Nov Iron,b mookon's knees see 4r Me wo.enowg Amon 14 of me surce<Ong Rtw Deutsche Bank Securities Inc. Page 49 EFTA01097703 13 January 2015 HY Corporate Credit Energy IFigure 46: Industry Relative Value Re11112.111011 & Costa per Mof! " A I D" A I g 3 Year All inI 3 Vest Ekll I Ree ymo nestigen°. I Lifil" pm. Full Cycle Company Costa OperatinAme tet Rum 2014E Amencan Enorgy Permen 511.04 51.79 11.98 13.51 53.76 NO /....5 NM Anion> Resource. 35.10 31.80 50.60 51.27 31.63 30.91 $043 $3 53 6.92 Bonen.. Geel. 111.74 £2.46 51.40 54.17 33.21 33.49 $3.37 5822 2.11 Chosapeake Energy 54.53 50.92 50.21 $1.73 51.67 52.48 51.77 53.77 1.911 Oman+ Enen/ $7.53 £2.13 50.30 12.58 32.52 $2.67 $2.64 56.20 1.98 Combo Resource. 511.21 5224 50.84 54.05 $4.08 53.52 53,21 57.28 2.28 Denbray Resource. 514.53 55.66 50.99 53.58 34.30 52.87 53.03 310.62 2.48 Citernxid Back Energy $1118 $1.97 50.49 54.08 55.46 34.23 $2.75 17.11 3.12 EP Energy 510.05 51.58 50.74 14.04 33.69 51.64 51.53 55.57 3.69 Emo Resource. Inc. $4.79 51.42 50.46 51.98 50.93 3422 $6.27 $8.79 0.44 Fabel Oil $8.413 $2.02 10.60 12.17 31.49 34.10 $3.54 59.01 0.26 Haken Smarte.. 512.76 53.12 51.30 56.67 $2.45 57.37 55.95 *13.61 1.18 leken Enen/ 5883 53.38 50.54 12.72 32.19 $1.96 $2.15 56.12 2.37 Magnum Hunter Resource. 57.90 53.09 11.48 sase (508,4) $10.27 519.59 *18.60 (0.223 Ledstales Penroleum 58.89 51.60 10.65 54.15 5249 53.37 53.92 57.51 1.11 Ruwheid Eg:dartelen 37.97 32.13 so.eo 53.11 51.94 33 80 33.91 17.28 1.41 Oaus Petroleum 51169 53.29 50.91 54.26 55.93 53 33 52.62 58.92 3.07 Parsby Energy 39.85 $1.90 51.28 5277 53.90 31 90 31.72 $6.19 2.96 Penn Vink.. 51092 51.75 51.59 5901 51.57 $e23 $0.41 31412 0.72 OEP Roseurne 57.36 $2.27 50.57 $3.03 $1A8 52.78 52.38 56.15 1.92 Range Resource. 34.41 51.23 50.50 51.32 5147 $084 $0.71 3295 3.37 Reseda Resource. 17.33 51.60 50.52 $2.89 $2-22 51.85 51.35 54.47 3.06 Samion 55.55 51.47 50.93 $2.53 30.72 53.60 53.62 56.35 (0.33) Sanelltelge Energy 18.48 32.08 50.71 52.63 53.06 32.67 31.911 57.18 2.42 SM Energy 57.57 52.22 50.51 12.33 52.51 51.95 51.78 54.90 2.45 Sandroa Energy 510.28 32.18 51.12 1501 51.95 37.19 53,51 512.40 1.82 Tullow Oil 515.37 5320 $1.29 5361 37.09 $7.95 $895 313.14 0.98 7/lengte Petroleum $1227 $2.42 50.75 $4.11 $4.98 $2.9 $2.5 572 $3.8 WPX Energy 35.42 51.13 $0.68 12.30 31.58 33.39 $2.78 35.411 0.88 Min 44.41 50.92 50.21 51.27 40.33 Max 51527 55.66 51.98 56.01 37.09 $6.32 Meen 3109 $220 308$ 3249 3273 52013 Mediae 11 52.95 112.04 Uiting Operating 3 Yeer All in 3 Year Dril Recycle Reakaatk>n G&A 1303A Full Cyck Company Coats Income bit Ratio ARK...cen Energy nemen $9.64 51.75 50.58 12.75 54.58 NA NA NA NM Amen> Resource. 54.77 51.57 50.45 $1.26 51.50 $0.91 50.43 5923 8.03 Bomro tructi 38.67 5232 51.36 $3.95 31.25 53.49 $3.37 57.77 1.40 Ons-spet/b Energy 33.92 $0.88 50.21 51.73 $1.10 52.46 $1.77 33.83 1.57 Omarox Energy 55.15 52.11 50.29 $2.55 $0.20 52.67 52.64 55.18 1.07 Concho Resource. 3287 51.98 50.80 54.17 51.99 53.52 $121 56.84 1.59 gorovy Recourcos 511.40 55.01 10.94 $3.58 31.87 52.87 53.03 59.74 1.61 Olemoncl Back Energy 59.26 51.64 50.49 54.10 $3.05 5423 52.75 56.87 1.75 EP Energy 51.48 51.34 50.74 54.01 5347 31.64 $1.53 55.68 3.22 Mao Resource. Ine 54.52 51.59 50.53 51.91 $0.49 5422 56.27 57.14 0.28 Petoet Pl 35.60 51.41 10.52 12.30 31.37 54.10 53.54 57.54 0.61 Heken Resource. $10.79 32.49 51.28 56.30 51.03 37.37 $595 513.48 0.98 lelcorp Ener,' 57.65 53.65 10.35 52.97 50.68 51.96 52.15 56.29 1.49 Magnum Hunter ReeOuntett $4.54 32.14 51.18 54.60 (53281 $1027 $14.58 515.61 (0403 Midolotee Petroleum 57.09 51.40 10.55 54.33 5081 5327 53.92 57.35 0.61 ~Alen Exporatien 56.61 51.82 50.80 $3.72 50.70 53.80 5141 $6.80 1.10 Oasis Petroleum $10.82 52.55 51.24 53.90 3312 33 33 $2.62 33.49 1.23 Patsloy Energy 57.73 51.67 51.15 $2.95 52.07 51.90 51.72 52.50 2.37 Penn VIrgina $9.95 31.42 51.30 56.07 31.15 3823 50.41 312.18 0.98 OEP Resource. $6.17 52.10 $0.57 53.18 5832 32.76 32.38 35.88 1.29 Range Resource. 53.94 31.24 $0.52 51.32 50.85 50.84 50.71 52.90 2.93 Rosette Resource. $5.93 51.51 50.71 5289 5882 31.85 $1.35 54,38 1.98 Seleion 54.54 31.33 10.79 $2.57 150.161 53.60 53.62 56.25 0.52 Sander*. Energy 56.82 12.00 10.70 $2.57 $1.45 52.67 51.98 56.69 1.18 SM Enen,' $1.07 52.30 10.55 53.30 130081 51.95 $1,78 5507 1.54 Sanchez Enorgy 57.01 52.02 50.50 54.75 ($0261 57.19 5151 $11.39 0.86 Tullow Ol 312.57 53.25 51.17 53.61 34.34 $7.95 $895 313.21 0.79 Tinne,* Pettedourn $10.11 51.99 $0.75 54.05 $3.32 52.92 52.52 57.01 2.74 WPX Ener 55.09 51.16 $0.68 $2.03 31.22 53.39 52.78 55.44 0.70 Min 4 ax 0.9x 02x 1.3x (3.4x) 0.8x 0.4x 2.9x (a04 Max 12.6x 5.0x 1.44 6.1x 4.6x loss 14.6x 15.64 6.04 Meen 7.4x 2.0x 0.73 3.24 lix 3.8x 3.6x 7.4x 1.6x Medlen 7.04 1.84 0.73 3.33 1.2x 3.43 284 67s 1.3x Santrecrneorg Moos ewan4xe0ne 8rn,trans. ~mbov Itsnor fD X««P 104154,1 COntaine4 nX CO.WO011y 04 High nekt lno toveren Som /erna ekanlang mamma ~Mar enk AMEPttARSCO.CX(21/910£1t1.7$04MHAMPO.0.4.9.K.WAROSESN.SEII9EN.SAMPLMILW4n4 kW% Naar IMnitporoilwars figtees n tor Sr )w...~ Amon' SI aide mos:~ we Page 50 Deutsche Bank Securities Inc. EFTA01097704 Figure 47: E&P Relative Value 3 r LO SINNed ow Tin 41 hol CO 0 teat Cecil xu COOL atAILONC51 LaC131ll Waal 661 '8 g Dior 11.616... • rW rx $16.405 1.1•1666561 Locoo, SIGMA LIMA UMW. VD 01104 Mn.. Loon.. lamon• a Ards. Sr g. Pe/04M 0114 W 8 Alegi 9165 1 An 19 107 Caottter v4)16 nx VS la '765 154 121. 121. 1217 I.YY 546 a ASCPCR 7.123% 1100 503 40100.1oCCC6.01 31.0,17 10334. W22 104 CO 1310 101 MAPCO 730% 1I10}1 5403 4•4410.010404,114 314017 10344 129 114 0210 n • hen lbws LAC N9 MS1 01:145brot111240 .0014 11420 279 452 1212. 54 014 lb Sic NA 0.30 14* 114 M 40% 53704 10050 1.10.531 000 Ost40.841601 I 1.1p.10 Winn' 1040 5130 950 9303 4.19 423 ii.11. &OPP 3.25 it It 074 IA 144 IA 144 0104 III 1027 5DA3 10 C 10 131 Nn ”22.4 404443 1403 111.:$00.5110240 PO IMO.*.1000.04.0 Saunas CNA NA 0310 N4 ea. 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Lx 144 204 4054 30 212 PX 40)% 16.4"22 SI») 9148994613.19.1 46499 :00) 439 49 96. 4214 314 044 244 314 414 $2, 445 W101 325,: 1559024 1630 132129404110/1031 159444 14403 9125 744 ta VIM 444 Ott 1.)4 234 304 4043 a 345 :40464:999/2(.4439 04404444 4M499.49404•49 04 9944 Sane* COlany Woe and0404403 tak Baer" ilituvriberp Menge LP For Us bawd?* torm»Mt. 1101con:malt* 08 HIS IrIab, Wont" Paw. mida Elbombarp mr~t“ ~Ma fa" AMEPERAV3MOD,FAMZEPCLISOMMIIWPAOA;PCPWIAOSCaSEVOEMS147PUtTLW and WPX EFTA01097707 13 January 2015 HY Corporate Credit Energy Chesapeake Energy Relative Value Chesapeake is well-positioned to weather the current downturn in commodity markets, a welcome contrast to the stress the credit faced during the 2012 meltdown in gas prices. Operationally, the business is on a strong footing as focused efforts over the previous two years to streamline its vast operations have driven a substantial reduction in cost structure (both opex and capex). This has been well supplemented by a disciplined financial strategy including modest capex outlays and debt reduction via divestitures (>$11 billion of cash proceeds over last two years). The biggest and most critical of the asset sales was the sale of its Southern Marcellus acreage for $5.0 billion. This was extremely well timed with an October 2014 announcement, just before the sector was besieged by the sham fall in oil prices. There were concems that the buyer could walk away from the deal given the changed market conditions. However, CHK managed to close the deal in late December - the final price was $400 million below the agreed price of $5.4 billion which was partly attributed to waiver of future claims related to title defects and environmental liabilities. Thanks to the deal, CHK is entering the current bear oil market with a substantially stronger financial position than it would have otherwise - net leverage pro forma the sale is 1.6x, compared to 2.4x at Q3 14. Liquidity has also been significantly bolstered to $8.0 billion - even after factoring in the $1 billion share repurchase program that the company announced concurrently with closing of the transaction. Lastly, the company replaced its $4.0 billion secured credit facility '15 with a new $4.0 billion unsecured credit facility '19 last month. While we do not see the weakness in commodity markets posing significant downside risks to credit fundamentals, it does present a major setback to our thesis that the company would join other large E&P independents in the IG territory. The view was based on the expectation that the company would see meaningful deleveraging and tum FCF positive over the next couple of years. However, under the changed environment for commodity prices, CHK looks unable to generate significant further earnings momentum despite quite solid operational performance. Over the medium term, we expect the company to record organic annual volume growth in the high single digits (with steady improvement in liquid mix) based on a modest annual drilling capex of $4.9 billion (versus $4.8 billion in FY 14E). We expect EBITDA to be in the $4.1.4.4 billion range during FY 15 and FY 16 (versus $5.1 billion in FY 14E) which implies annual FCF burn will average —$1.6 billion. We also do not see the gap being substantially bridged by asset sales as the management is unlikely to pursue non-core asset sales proactively in a weak asset market. Overall, we expect net leverage levels to move back above 2x levels (2.4x in FY 16E). Given CHK's lackluster hedging program (29% in FY 15E), we see considerable downside risk to earnings. Further, differentials on its gas production (-67% of FY 15E volumes) is one of the highest among peers (>$1.5/mcf), making it even more vulnerable to weaker-than expected commodity prices. For example, at $60 oiV$3 gas, we see FY 16E EBITDA moving down to $3.4 billion and leverage going up to 3.3x levels. Moving on, management had of late been indicating that it was open to acquisitions. Its strong liquidity levels after the Marcellus sale in the context of the asset market turning into a buyer's market presents the company with an opportunity to shift faster to an oilier asset base. Page 54 Deutsche Bank Securities Inc. EFTA01097708 13 January 2015 HY Corporate Credit Energy In summary, while we remain constructive about CHK's operational story, we believe the impact on the credit will be offset by weak outlook for commodity prices. CHK bonds have outperformed the sector solidly over the last year and especially since the meltdown in oil prices. The longer dated Notes trading in the 5.4-5.5% range, which we see as fairly valued as the prospect of an IG upgrade over the next years has clearly dimmed. We are therefore moving to a HOLD from a BUY on longer dated bonds ('19-'23) and maintain our HOLD on the shorter dated bonds ('16-'19). Upside and downside risks are tied to a recovery or further weakening of commodity prices respectively. Deutsche Bank Securities Inc. Page 55 EFTA01097709 13 January 2015 HY Corporate Credit Energy 'Figure 50: Chesapeake Energy Financial Summary ChOMPON421 EMMY las Pelcadroo 1141 0440.0401 101120 044511 Wks, . 101 ‘Pin fear loop 1'.a -n..1 40 000405 5500 10517 NC IC 115110201. 15 Foranato. thaw/ 4 2 0•0 1 PC IC 510102542 10 onanotto. 5•00 110010 IC IC 10 8-, 044 OM PRA 44.4 034 RORY) 11400 14040 0110 11.01.102542 al 414.0440. thaw/ 11 1 000 PC IC Santora 542 al 41420410. thaw/ 1005 IC IC OO.L.I.$44•444444•4 NO ' O. 24:54•44444 Nom a / RR Ow deR4loo aZIISMIEMMIEMaM2XIMMCa =========1 04 05 :ROC ...RR ...OPP Own am. 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IA. 20 224 244 2174 A. 1.44 10 244 244 DR4CIIITCIAtTC1notsertlinflask. 236 214 2% 14 44 27* 34 Mb 09 224 2.44 Lb Mb 24. 74.1100131000 (pct. racensara9440441 214 123 2% 19 1.74 2.9 29 241 a 344 224 sit 241 244 2444464444449114 PHI NM MR •141 MN MN •141 NM lebt PM 970 40121 1:9 Int: 4444404444 444.414462 /AR PO al CO 41.11 114 11 it 4,13 SI IA 696 II 41 Seurat Doursoto EWA, clammy,"don EFTA01097711 'Figure 52: Commodity Price Scenario Analysis: Chesapeake Energy Forecast Metrics FY 15E Eel* DA (9111.1166( 1- 1' I SE rcr i 5 trF 1.11.1FX 51.75 12.25 1273 83.25 $3.7$ $4.75 11.75 µt5 1275 13.25 39.75 µ25 54.73 1970 502 St 012 $2.322 $2.731 13.065 $3.375 $3.728 $304 (53.299) (3.023) 124771 1125311 112367) (12231) ($1.416) $400 51.90* 52,317 32.725 13.136 53.409 43.779 $4.133 WM (2.006) 02240 (22911 112.1451 111.905) 0 1.804 (51.603) $50.0 8311 12.721 13.131 13.510 53,676 MAO 14.537 1560 (21543) (12.257) 1021/111 111.7051 111102) 0 1.466) (11.2.50) lion 12.716 1.3.126 $3.535 $3.945 41278 14.598 14.942 600.0 (12121) (11.975) 1114291 013821 NEN% 0/.082) Win) $70.0 13.120 53.530 $3.940 $4349 $4.683 $4.992 56316 Pt* $1.738) (11.432) roao 01.0001 18371 ($700) 11510 5600 36025 $3.831 $4.314 14.754 13007 15.397 16.751 $100 01.355) (11.109) (tS63) 166171 (1441 WM) ($132) Moo 36057 14.297 $4.700 15.116 13449 13459 16.113 MILO 0 1.015) (1773) ($527) 112001 120 1205 0 1171 FY 166 EUITDA (S FY 16E FCF (5 Million) IMIEX Ga* (S. and NYMFX C., $1.75 1225 $275 $3.25 $3.7$ $42$ $4.7$ 51.7$ $326 $245 $3.25 $3.7$ $425 14.75 $30.0 1248 $736 51.45 51.713 32201 12.616 $3.177 190.0 ($5.151) ($4.672) lµ191 i$3,7i5) 151229) 02460 0 1.2546 $40.0 1368 $1,356 518 14 52.332 12820 16309 3.57 $40.0 (14.522) 04.013) 113.566 153286 (12113) $2301) (Kra $504 VAN $1.976 12.444 12.962 53.440 51926 $4.416 $504 (33.010) (11.0 0 1124171 1$1.674 02106 0 1.010 111000) $004 52.107 $2.596 $3.053 $3372 11060 14.546 $5.043 5600 ($3.285) (12.756) 42207 111.6291 111.313) ($055) 43725 $70.0 12427 $3.215 13.703 24.191 14.679 00.167 16.656 $70.0 (32636) 02.157) 111679 1112001 $257 1$7141 02271 WOO S1347 13.835 $4.373 $4.81. $5299 $5.787 66.275 $80.0 02007) 111.521) 111050 35711 0861 1402 2886 $900 53 966 54454 64 912 15.431 15919 16.407 16.1191 1904 IV 3751 (5896) ISMS) 16. 1547 51.035 11.518 FY 1SE Net Leverage FY 16E Deb1PrOved Reserves (EMete) NYSAE X OP (S'mc10) /104E% 044 (5.661.9 51.75 52.25 275 325 $3.75 14.75 µ75 $145 $215 $2.75 325 53.75 $425 615 630.0 7.2. 59. 4,8. 4,0. 3.23 I Ix 28. 133.0 $0.8 OA 108 108 50.8 50.8 50.8 $400 5/6 17. 34. 3,3. 3097 27x 2.4. MO $0.0 106 $06 $00 10.0 $0.0 606 5500 47. 39* 33. 2.0. 26x 23x 2.1. 1500 $0.0 106 $06 $00 10.0 $0.0 106 3 160.0 316 32. 2.8x 2.4. 22. 261 It 160.0 $0.0 $03 106 100 10.0 1.0.0 $03 $70.0 321 28x 24x 2.1* I.S. 13x 1.66 $70.0 $0.0 $03 106 100 10.0 1.0.0 $03 SA 2.7x 24. 26 1.9. 1.6 14x 1.6.. 5900 $0.0 106 »e 500 9/0 $0.0 106 5600 2.4x 21. 1.9. I,?. I.6x 1.4x 13. ENO $0 8 506 SO 6 V.I8 9)8 50.0 106 FY ICE NIA LeVetilie FY 16E Debt Played Fle(serve, (SEICIe) liY1.1Fx Ci S. rnchn $1.71 5220 62.75 17625 3.77 64.30 54.7$ $1.75 122$ 275 $7125 $3.75 µ2$ SA. 190.0 53.6x 17.6x 10.3. 7.2. 5.5x 4.4x 3 fix 130.0 50.9 509 509 309 50,8 50,8 503 $40.0 14.7x 92x 6.6x Sill Aix 3.4x 2.54 140.0 50.9 509 108 308 50,8 14.8 $0.8 5500 121 80. 4.7. 31. 326 EN 24. 1500 $0.9 106 606 600 930 $0.0 106 $500 51x 46. 33. 3.0. 26. 224 20. $604 $0.0 106 $0 6 $00 930 $0.0 $06 170.0 Aix 14x 28x 24. 2.1x It En $70.0 $0,8 $03 $08 308 508 1.0,8 $0.3 $80.0 322 2.75 23x 23. I. It 5.46 183.0 $0,8 $03 308 108 50,8 1.0,8 $08 5600 26x 22. Mb I.?. I.6x 1.4x 1.2. 1000 $0.0 106 606 $00 50.0 $0.0 $0.8 Strom Dow.wts Stwg Deutsche Bank Securities Inc. EFTA01097712 Deutsche Bank Securities Inc. 'Figure 53: Chesapeake Energy Benchmarks :Oil 7011. 10?) .0.1. ea I% =Win Ore~er•I•VMde Cab Calm Cah01.~UN* 121 t. 110 510 129 $3 9 I 558 15 7 170 $30 1110 $5 $4 $2 5 120 lie 136 150 550 $20 125 140 140 115 il 1 120 11 130 110 110 II& 120 520 110 $05 115 $10 110 SS o 100 2013 201E 2015E p0 2013 3014E 100 2013 2014E 2015E Dow gamma •C.4( air, I .0a alWwa iNea DebtelllTDAI 60% lix 36x 3 Ox 124 301 25* 17x 17 2a< 1C1( 50% 40% 10. 25x 08x 20x 30% 013x It( 20% 164 04x 10% 024 051 0% 00 00x 2011 2012 2013 2013 2014E 2015E 7111 1012 2013 2013 2114E 2016E gi,. gamma ensi, •NielniN Gain .01a ',Man allIn fik Soutee 0~.~ 54v,k. Bloon~p ~LP, co~v Sui lexfusny fowl 44~4114atim 8E~ 14~ MooRaintlucAi «nut midnon. ~ate conyakein For N. iboowns, corny:wit. ~al by C18 High Pf.ffiq NOMradnApw.n owm4MAO4aY(Mnlna CM( =DIM, ST.XCOMILCRP,M1(FIPXOEP,RRCSAIIIST..vglSD For N. iboowns, cornirmna noun" by OS Pfdpn YMA CM linleaSt* 4nårtli air Bbointsip maims saw ontyALIEPEltilABCD.OailielEP/iliSeliMill~,OASPE.PV4ROSE.SliSEVGENSWPWIEW~fa EFTA01097713 13 January 2015 HY Corporate Credit Energy Cimarex Energy Relative Value Cimarex (XEC) ranks relatively high within the peer group in context of facing the current commodity downturn. Its strong financial profile creates a solid platform; its sub 1x net leverage level (0.6x at end of Q3 14) is the lowest amongst our peer group and liquidity is solid at $1.6 billion including $564 million of cash and undrawn revolver of $1.0 billion. The favorable financial position is attributable to conservative management, which over the years has focused on maintaining a strong balance sheet. During the Q3 call, management reiterated its focus on the balance sheet pointing out this would be one of the major factors in determining the FY 15 capex program. Besides a solid financial profile, XEC's asset quality and strong operational momentum are both unparalleled. In its core Permian play (—55% of Pie 14E Permian capex budget), XEC has successfully drilled longer laterals with upsized fracs providing solid upside to well retums. In a recent update, XEC noted that its traditional Woffcamp well (i.e. Culberson County, Woffcamp D well) with a 10K foot lateral would provide an impressive 89% before tax return at a price deck $6013.50. The returns on a normal 5K foot lateral are also highly competitive at 45% before tax (@$6013.50) clearly explaining XEC's investment opportunities. Wells results in its other core Permian zone -the 2nd and 3rd Bone Spring - continue to yield solid results with 30-day average IPs rates (New Mexico wells drilled in FY 14) improving 47% YoY. 2014 also saw XEC's renewed interest in Cana where returns improved on applying upsized films; the new frac designs allowed XEC to expand its addressable Cana acreage. Cana opportunities were widened further with possible Meramec prospects - where the company has drilled seven wells with the encouraging results from inception — 30-day IP rate was 9.4 Mmcfe/d. Driven by the positive developments in Mid-Continent (24% of FY 14 Capex), XEC plans to increase capex in this play for Pie 15. The quality Permian and Cana assets has allowed XEC to build a strong operating momentum; the company has raised production guidance from 13% growth at the start of year to 25% YoY now, and all this is happened with capex of $2 billion, which implies modest cash burn of -$350 million (majority funded by asset sates, net of acquisitions). Moving ahead, the positive momentum will play a crucial rote in limiting cash burn given the bleak commodity outlook; we see the company moving down towards a run-rate capex of $1.5 billion while maintaining 10-12% annual production growth. Despite a largely unhedged profile, the company still be able to limit cash burn through Pie 16 to under $700 million, and we expect net leverage to be less than 1.5x at FYE 16. Page 60 Deutsche Bank Securities Inc. EFTA01097714 13 January 2015 HY Corporate Credit Energy Overall, XEC is well positioned for the current situation driven by strong financial profile, quality assets, solid operating momentum and conservative management. The only negative in the overall positive picture is XEC's unhedged nature; that being said this hedging approach is not new to management and in the medium term this is largely offset by positive operating momentum. Also worth noting, given its extremely deep inventory in the highest IRR play in the US (Permian), Cimarex is the rare company that remains on the M&A radar for large integrateds despite the drop in commodity prices - this is observed by looking at XEC's strong stock performance other oily BB names (NFX, CXO, SM and DNR) over the last six months. We also believe this strong profile does not preclude XEC from still being upgraded to IG despite the commodity backdrop. On the whole we like XEC's positioning in the current situation and possible catalysts in the form of either IG upgrade or possible M&A. We believe it could still see tightening from current levels on a probability weighted basis (4.375% Sr Notes +320 STM). We maintain our BUY rating on both the bonds. Downside risks include possible leveraging acquisitions. Deutsche Bank Securities Inc. Page 61 EFTA01097715 13 January 2015 HY Corporate Credit Energy 'Figure 54: Cimarex Energy Financial Summary tee Men MSS IC OW IC Pb 5075% 50 /425.4.4 X02 041 pen,/ 00. ni401 140022 141107 10274 427914 S0141•00•4 2,101 041 10.0.40P MN 4.0401 1.041144 144t.24 1030 111•1100 2AC I 14:4 ni 444tnolliejni Osn Meal • [us Ike Hats • • NW Ann. 647 460 2.451 1.791 1914 esl Operalto Cot 184 130 1-14 IN 2* 7P KB 64 €Al /4 a•N0449,4 gmantes, t NI III III NI III 7 0 Pi CenD.ve am wows NI 167 IN 417 444 IA/ IA* 1446 IAN ODA 196 174 074 116 221 744 19I 61* 60 WIT 02 143 231 342 O4 an 145 555 747 04041 i 6 7 9 NI 3$ 2 21 051i4.5 01w0, 126 179 224 234 444 $43 674 741 omonn...2964.44 A Oa 4 131 P11 0441 1 14 Oa C441, 010,7S ®10441011 120 324 221 1616 236 IA* HI Al AM 0.044 92 117 $1 n 44 377 112 207 323 •441140400 IN 24.1 IN 149 414 614 430 341 OS UM ENTON se 1404444 IAN OK IAN '.00 14311 IAN 121$ 1444 1304 I. 00 ESTAIX *AIM 00.0 tlia I.NI 4411 IAN 1414 IAN NW 1.4E 1.90, S OWS Vfilen101101/ 10141 1741 1941 INN 9726 1412 018 44,1 97 . 40.04.0004410f a z144 4 ,000 340 8.16 472 464 316 424 402 243 4.47,Preaues Cub 0,rpirl Itgazi G. 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Mae) Pe $161 KO 1411 1461 051 14.61 KA V* 11.44 PM 110 120 140 444 $3.000 06650098* Comoro/ abes 0 EFTA01097717 'Figure 56: Commodity Price Scenario Analysis: Cimarex Energy Forecast Metrics FY 15E ERITDA )8 Million, FY ISE FCF' IS hYNIFx 1..1 SUS $225 $2.75 025 all 1425 $4.75 $1.7$ 12.26 $2.713 025 63.76 $4.25 $4.70 $300 $179 5267 1,355 $443 $531 $619 $707 $300 ($1.082.. 41.0171 4952) SIMI (36231 4 756) 1149/3 $40.0 $383 $471 $599 $647 $735 5423 $811 $10.0 ($8331 44663 1$034) /391 ($671I ($610), 11546) $50.0 $587 5675 $763 PSI $939 51.027 51415 INA 4785, 4720) ISM) 5901 (16261 4481) 4394) 500.0 5791 5879 $967 11.066 $110 51.231 51.319 $00.0 (56341 i$571) 11507) 11421 ($377i 4312) 11218) MO $995 51.010 51.171 5) 25,9 $1435 sue, $4347 61.523 POO ($4871 (6423) 0356) $2301 (52291 (MN dog) $80.0 $1.267 $1.373 $1463 $1,561 $1.639 $1.727 $na 43391 4274) 11201) 1451 4801 ($151 149 $90.0 31.443 11491 $1.579 14)667 31.755 31.843 11.931 6040 4 1901 (5125) 661) IA $69 $133 $198 FY 16E El3ITOA (S Million) FY 16E FCF (5 /Aillion) NYNEX Gas t NYMFX Gas IS 11.75 $2.25 4525 $335 16.26 84.75 111.75 1225 $3.25 $3.75 MSS 64.76 $200 6297 639 MIMEO= OSLO $491 1.9118 $485 $781 $304 ($1,346) Ol.2521 41.157) l$0383) ($8,0) Gem) ism $400 1125 $522 $616 $715 $312 5909 $1.03$ $430 41.1218 41.013) On) 1$13441 ($7501 11561) 4655) 310.0 9840 $746 $643 1910 $1406 $1.133 $1.230 550.0 ($2091 (SUN 1$7274 1111$911 (35311 NON 4342) 9900 117. 1370 $11367 11.164 11.261 $1358 $1455 560.0 ($590) (4695) 11501) 111061 ($3121 4318) /1123) 130.0 31.098 11.195 $1292 11.388 11.485 31.582 01.679 $700 (1,471) MTh ISM 181881 ($431 $1 $96 SSW) 21.322 $1.419 $1311 01.613 11.710 21.06 ELKO $130 41521 41561 OW) 131 $126 $220 $315 $90.0 $1,54] $11/44 $1,710 $4837 $1934 32.031 62.126 590.0 ($33I $61 $166 5260 $345 $439 $533 FY 1SE Net Leverage FY ISE DebtProved Reserves (SIVIefe) NYIAEX 084(1'mcle) NYIAE X Os. (SINN) 11.75 12 0.25 µ75 tA.IS µ75 $1.75 5225 3275 0.25 ]5 SOS µ76 $30.0 126x 82x 6.0x 4.6. 3., 3.1x 2fix 530.0 50.9 $09 1,09 308 SOS SOS SOS $40.0 5.6tc 43x 346, 29. 2,5x 22x I9,, MO 54.1) 104 $06 $08 SO.7 30.1 10.7 1500 33x 28x 2.4x 2.1. la 1.6x 14x $900 54.1) 804 $0.7 $07 $0.7 SOS 10.6 $40.0 22( 20x 1.7x 1.5. I.4x 12( 1.I. 560.0 $0.7 0.7 93-7 106 30.6 60.6 605 $70.0 1.24 1.5x 1.3a 1.2. IAN 0.9x 0.8x 170.0 $0.7 105 sae 106 30.6 60.6 605 $100 lax Six Nht 0.e. ortc 0.7x 06x 6604 $0.6 SO 6 SO6 SO6 $0.6 60.6 10.6 SO It 0 9,, 0.11,, 0.1,) 0.(4 0.6x 06/ NO 0 60.6 Sob $O6 $x6 96.6 60.6 10.6 IV 145E Ncl LeVetdlit . FY 16E Debt Played Reserves (S Melt, lin1Fx 0 S. m< 4 I SSTS 5226 Sin 3325 =7S $420 µ3O $1.71 22$ $2.75 025 0.7$ US $4.23 130.0 1211 83x 6.1x 4.74 3., 3_Ix Zfix 1930 544 $14 $1-3 $1.2 81.2 $1.1 $1.1 $40.0 5.6x 4.4x 3.5x 2.94 25x 21x 1 8x 140.0 $1.3 $12 $1.2 $17 $1.0 $1.0 10.9 1500 33: 2(0, 2.4x 2.0. la 111 13x $500 $1.1 $1.1 SIC $I 0 $0.9 $0.1) 104 SA 224 114 47x 1.5. la 1.1x 10. $500 $1.0 $0.9 S09 SO 5 $0.7 50.7 104 $70.0 ISx 1.43, 1.2a 1.1. la 0-8x 07x 970.0 Sal Kra $07 SO7 SO 6 SO. 6 $aS $80.0 12 It 0,9x 0.8. 0.71 011 05x 140.0 60.7 60.6 606 606 10.6 $0.6 SO. NU 01: *$$ 0,7x It/ 0,5x 0.611 04x 3900 $0.6 $0.6 SO6 SO 6 $0.6 134.6 10.6 Sours, Deana. Sank EFTA01097718 'Figure 57: Cimarex Energy Benchmarks IERNEstEse 294 sew foto dem ProlsOisisarn 81% 04 1 SUS 5590 250 ocrit 2S% xg, 31% $45 540 2 it MI 3A SE842 I an 20% 50% 18% 00 9 20% 40% ISO 50 '5% 1202 30% 00 1011 100 10% 20% 00 10% 0 8 ii $00 100 0% 2011 333E 1710E 263 264E 20IT 311 012 330 201E swc ovege W . 141 1080660 04886 arC 01•1in ED 501 aran011 Gown cal op.ions 6800 6 131 13 wl 250 200 150 00 oco 150 Ii 100 2013 201E 2011E 2013 2011E 201 2013 201E 331 2012 2013 Ewan* Eon stEC 34.59$30 0403 CM sins Erin fteenel wit4s 86 33 Og 7• 63 201 507 20E 213 13 23 10i Oh 03 Oh 03 200 20IE 2013E 2012 2013 2013 2014E 2015E sec Erns roan Side PP -In 03c •••••••• Oben Saaoo ClaWare ant Abontrog F4444w to carman/ as Mar: sp In w)114.434211133Qn Stand Wilda, S 4444444.41444,W LM' 4orwoclawl non. owawlcomptela Pm 1.4.4 (66r6.6 cor6n6s comved by OS HO MOE Use (ww.4-33 Agway ,86:t ourputan054468869. CH( XECDAWFSPX00.4411CRP,AVWX004,ARCSAIIIST LWSO FP, LI*(40444.44 cor6v8is not cnrcalby D8 Kph 168. CA 6Wnst 69LiAlt /oho 11334.pbug consensus wohtunti an3AASEPERAUICE4OCOMIKEPXOSOWAYPAIPC40ASPEPW4ROSEXX(SEVGERSA(1)341112W(kW WPX 97 97 cn EFTA01097719 13 January 2015 HY Corporate Credit Energy Denbury Resources Relative Value When we moved to a guarded stance on Denbury (DNR) early last year, a key reason was the company's inflexible and high cost business model in the context of rising medium term downside risks to oil. With the downside scenario on oil playing out - more dramatically than expected - credit fundamentals should see meaningful stress, though impact in near term will be cushioned by its strong hedge program. DNR's relative vulnerability is explained by its asset portfolio, which consists of conventional assets (including core tertiary operations), in contrast to its peer group dominated by shale assets. This translates into significantly higher LOE cost of $35.71/boe (FY 15E), more than double the group median. While management recently stated that they would focus on lowering their cost structure, we see limited scope for improvement in the near to medium term. The asset portfolio is also characterized by substantially lower decline rates and long lead times periods for its tertiary projects - both of which reduce the company's strategic flexibility in the face of an oil market which has suddenly become unstable. Basically, the company will be stuck with highly defensive (i.e. maintenance level) drilling program given the heightened uncertainty regarding long term oil price outlook implies shaky economics for assets with a backend-weighted production profile. The ambitious plan for a full-fledged tertiary program in the Rockies, deferred to the latter part of the decade earlier, is unlikely to be executed if the current oil price environment persists. The outlook for a defensive approach is exemplified in the company's FY 15 capex budget - at $450 million (excluding $85 million of capitalized interest and costs) - represents less than half of its previous medium term annual capex outlook of $1 billion. While YoY production is expected to be relatively flat, only modestly below previous target of mid-single digit annual growth, the corollary to that is it will be unable to respond to an upswing in oil prices with a quick ramp-up in production via aggressive capex in the medium term. Moving on to FY 15 outlook, we see a meaningful decline in EBITDA levels to $927 million from $1.3 billion in FY 14E due to sharply weaker realization. While, on paper, the company has strong oil hedges (77% at —$80/bbl), more than half of the hedges also have a short-put (average strike price - -$66/bbl) embedded in them - given our FY 15 price deck of $54.38, the protection provided by the hedges is somewhat mitigated. Net leverage should deteriorate by 1 turn to 3.7x but FCF should be modestly positive at $235 million. At our long term price deck of $70 oil/$4.25 gas, run-rate EBITDA would be close to $800 million implying net leverage of over 4.0x, and we see the credit steadily moving towards that level as the current hedges roll off. Even this scenario would be acceptable because the company would still generate slightly positive FCF based on maintenance capex in the $550 million range. The critical threshold for DNR would be oil at $65/bbl (unhedged) — at that level, cash flows would not be able to sustain maintenance capex. On the positive side, liquidity is solid at $1.2 billion (largely availability under its $1.6 billion revolver) and should improve over the year as the company uses FCF generated to repay revolver borrowings. Page 66 Deutsche Bank Securities Inc. EFTA01097720 13 January 2015 HY Corporate Credit Energy In summary, we view the split-rated DNR (B1/BB) as relatively more vulnerable versus its BB-rated peers in a scenario of extended period of downturn in oil prices, thanks to its high cost model. Admittedly, yields have widened significantly in recent months factoring in the new reality. However, even at current YTW of 7.0-7.5%, we see better relative value in a credit like Hilcorp, which is a good comparable given its largely conventional asset. Hilcorp Notes '21 (YTW: 7.3%) trades in-line with DNR Notes '21 (YTW: 7.5%) but has a significantly more resilient credit profile (1-2 notches higher credit rating) driven by a meaningfully stronger financial position (FY 15E net leverage of 2.0x versus 3.7x for DNR). Hilcorp also benefits from its exposure to Alaska gas market (-20% of FY 15E revenues) with fixed long term contracts, a welcome diversification from the weak US gas and global oil market. On the other hand, investors looking for more direct oil exposure (and the effects of an increase in crude) with a financial profile/rating similar to DNR could look at names like EP Energy (EPENEG) and Rosetta (ROSE), which can deliver faster changes in operating momentum, in contrast to DNR (discussed above). EPENEG Sr.'22 (YTVV:9.1%) and ROSE Sr. '21 (YTW: 7.4%) therefore provide relatively more exposure to commodities in such a scenario. We are maintaining our SELL recommendation on all DNR bonds. Upside risks to this rating include a strong and sustained improvement in oil prices in the near term. Deutsche Bank Securities Inc. Page 67 EFTA01097721 13 January 2015 HY Corporate Credit Energy 'Figure 58: Denbury Resources Financial Summary Si,- - • 1\X4 1 54644.40 8.4enwein P4m4.• 8111401399(1174.10 1647016 103.1.1 5):#4 :sr r..44.4.4.4.41.4”. au 2333 littrAlb.4.110.94/4•1 14.1.42 14440-17 1411 s kn.) 5.44.344143 ,4n4.1.4 ZVI Pillt$4/b44 .02 'Built! 1444 23 10213 4$ NS 64) 433 2413 674 616 431 Z43) 3 444 044 221 244 744 277 242 834 tom II) 1271 $ 124 11071 111 Minn 445 nnom 337 Ms 344 UM 1.550 IAN 004 14 U.S 141 547 610 LOT 232 184 191 30 PIO 1013 09 49 47 41 14 14 41 LOT c4o04041411 267 Ia 86 147 5 IP) 8X) a 43 131 IOU 01 le .54i0tN(401 34 129 LOI1464014% Taml 67 M 36 144 31 213 -Mims 410 LnatelirtniniaMien ISO 1.040 1411 1,34. 1.14* 1.350 4.449 130 49/10214100.41414141 1411 1.11 4471 1441 412 1.441 1433 IMO 41.444• ,S1144 1106.13 19441 NW 114710 14725 510 1194.14 31 07 evi Mk Nan 0101444011 $143 347 102 44 Ulf 6421 123 347 Kiln 0_05 0.1.0.40•44$ 044'01 2.112 994 307 t33, 1.741 214 10054 21434 n. new NS Cs tro144/44 pal 410 4441 $427 UM 301 1247 40 4 Ae 04Pna)Wt. 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Page 69 61 'Figure 60: Commodity Price Scenario Analysis: Denbury Resources Forecast Metrics FY 15E EDIT DA 'S Million. FY 15E ICE Iru'i O um $313 $275 025 075 1425 $675 $1.75 $225 $275 9245 53.7$ $425 14,75 $30.0 3669 $663 $567 $572 11$75 $306 $300 ($1211 0115) 0114) 111111 (6)071 (Sip ISM $4OO 1699 $703 $?Ml $712 $716 $721 $726 $400 ($171 413) 1110) (36) CM) SI 35 $50.0 4939 5844 1845 1952 9356 SEM 5866 150.0 $87 $91 $95 395 $102 3106 $110 $960 5984 $9811 5932 $997 $1.002 57007 $300 $192 $195 $09 $232 1206 1210 1214 $400 $704 11.073 $1577 11552 $1.036 $1000 31.095 $1.10) $700 $200 $264 $267 5271 1276 $276 $202 580.0 11.106 31.110 $1.114 51.115 51.123 31.128 11.133 $80.0 $205 $23) $293 1297 $300 $304 $306 PAO $1.293 51.234 11238 $1243 51.247 51.252 11.257 $90.0 5392 $395 1399 3402 $406 $410 $414 FY 16E. EDITOA )S Million) FY 16E FCF ($ Million) NYMEX Gas Minot IMMEX Gas IS mcI 61.7 $29 3275 $3.25 µ75 49 54.75 $1.75 $225 3275 13.25 $3.25 µ25 SATS $305 t1391 ($3$1 428) II= 4171 0111 ($61 $300 t1635) t1630 it6n) 1$5201 (SCR (5610) ISM) SOO* $106 $192 $196 $254 1209 $215 $221 $400 04271 (UM (417) 10121 (407) ($401) ($396) 150.0 $412 $41$ $424 $429 $135 $441 $446 150.0 ($2181 (6213) RSV ISROI (0961 01931 MON $50.0 1638 5614 1649 5665 3661 1667 5672 $60.0 0101 ISS) 9) $5 $10 $15 521 1829 OW 5861 UN 5872 $878 5884 $700 1178 WO $188 $193 $199 1204 1209 $740 NW) 21.020 $1.00 0.039 $1.015 21551 $1.056 $1.20 $230 $322 $327 $332 1037 3342 $347 $352 $90.0 $1220 $1.226 $123.2 51 23 7 1120 31.249 31.251 123.0 1403 $41.9 3494 1499 1504 $609 $514 FY 15E Net Leverage FY 15E Debt(Proved Reserves (SMO1e) NYNEX Gas (6.mcle NY/SEX Gas Manc( ) 51.7$ 42.2s 3275 63.25 $3.75 $4.75 µ73 $1.75 /2.25 $275 13.25 53.71 54.75 µ75 005 65x 657 6.57 6.4 6.4x 63x 5.27 $300 31.3 $la 513 sla $1.3 $1.3 $1.3 $40.0 5.1x 51x 50x 5.0. 50x 49x 49* UM $1.3 $13 $1.3 313 $1.3 $1.3 $13 150.0 417 4.17 4.17 402 4 Ca 407 50.0 112 $12 11.2 $1.2 $1.2 $1.2 $12 520.0 3Ax 347 347 3.4 3.4x 33x 337 550.0 $1.2 $12 512 $1.2 $1.2 $1.2 $12 3.1x 117 357 3.0x 3.6( 10x 207 $740 $1.2 $12 512 $1.2 $1.2 $1.2 $12 $201) SSOO 307 29x 2.9x 2.6. 20 29x 29* $10.0 ill $12 11.2 $1.2 27.2 $1.2 $12 MO 25* 26. 2.6. 2.5. 2k 25x 2.67 $900 $1.1 $1.1 11.1 31.) 21.1 ill $1.1 FY 16E Net Leverage FY 16E Debt Proved Reserves (S Morel NYMFX HYMEX Gas (Smcre) 11.75 52.23 2275 13.25 µ75 54.75 µ75 17.75 5225 13.25 53.7$ $90.0 1059x -127.1* .152.7. 191.6x -2373x .3925x .130.47 130.0 11.5 4.5 $15 $I 5 $1,5 $400 21.2( 20.67 20.04 19.4x 185* 1937 17.87 $04 11.4 $1.4 $1.4 $1.4 $1.4 SO ilk Six 116x Ili 52. 521 61x 1'1 $500 S1.3 $1.3 $1.1 11.3 543 560.0 621 5.2x Six 5.1x 562 5.06 407 $60.0 MI $12 $12 $12 4.2 0 $70.0 35x 357 Ilk 3.6 3.52 35.3 3. 170.0 $1.1 $1.1 11.1 ILI $1.1 $6.0 2.3x 287 287 2.10 2.71 273 2.77 $800 $1.1 $1.1 11.1 11.1 $1.1 WSJ) 220 22* 2.1x 2.1x 2.1. 2.1x 2.1x 030 ill ill $1.1 Kt 4.1 Sour. Dordiso. &yr* ir EFTA01097724 Deutsche Bank Securities Inc 'Figure 61: Denbury Resources Benchmarks 3000 IOU 01190 00100.020.0 250 $ 1101 111 320 lies 31125,8 he 1l54,44 Ma 50 30% 30% 00 70% 150 100 3313 3014E 3010E 3311 2012 3013 We Twee. ei0n. an -ea *Pe 01113.dilford Sao $40 $57 1300 100 930 000 020 N0 00 130 100 000 1174 900 IMO ST30 200 12:10 100 $5 0 100 0:10 930 $0 0 100 2011 2012 3313 3313 2010 20M &DWI •Vaalli nee snit *Mat —in IIVIR Sena 0•1001106.0 90 919 401 leo BO 36 !O 301 613 451 00 10 20$ 30$ 151 20$ 10 $ O6 Orb O rs 2011 3312 2013 2011 3312 2013 1013 4014E 4015E Ca ~003 oobsinat — C. Ole°, ale So of Doidacts Bonk condi,/ defy aleapfelOOLP Mean" fowl AtlietzMallenBB.a,M.6t,nHMMob indaeb bah cowrodmid non. p>nna 4000•049 FOE NO Meow," comparve. oann00y D8 HO 1N( NO &Incases F"w46 mats puWAtIod astinwas. 044 XEC,OWSOCCOMILCRP,III(NOCOEPARCSAIVST an:orSO Fos No Meow," comparvey nix cow**.by08144 YeaL al heat iViva ne,1Beep co/:minus amatunts oter. AMEPERARSCROCCVAIRUPWSCA(MHAMMOASPEPVAROSC SN.SEVLWAtS4VPIA4 YEWOM WAX EFTA01097725 13 January 2015 HY Corporate Credit Energy EXCO Resources Relative Value Severe commodity headwinds have pressured EXCO Resources (XCO) credit fundamentals. While the company's core asset, the gassy Haynesville, is a quality asset, cash flows are decreasing at the current FY 15 gas strip (—$3.0/mcf). Its acreage in Eagle Ford is second tier but still of reasonable quality but is likely to have marginal economics below the $70/bbl threshold. Offsetting this gloomy scenario, we see some positives. First, its core Haynesville position is has resilient economics. As of June 2014, the company had a gross well inventory of 85 wells in the Holly area (Desoto core), which garner the best returns in the play with a breakeven (defined as 20% pre-tax retum) at $3.35/mcfe and 40% IRR at $4lmcfe. Next, it had another 143 locations in CCM-Haynesville with estimated breakeven at $3.72/mcfe. With close to 230 gross locations, which will generate robust returns at longer term gas prices of $3.75 translating into -5 years of drilling inventory (drilling plan of 42 gross wells in FY 14E), the company should be relatively resilient to downside risks from a gas market grappling with oversupply in the medium term. Over the longer term, when the market is expected to be more balanced, the company is well placed with about 600 gross locations with a breakeven threshold of $4.27/mcfe (or --14 years of drilling inventory) and another 600 locations with a breakeven between $4.27 and $6.00/mcfe Second, its asset base also has a significant Proved Developed (PD) component - —737 Bcfe as of FYE 13 or 5.4 years of reserve life based on FY 14E production, which reduces the pressure on maintenance capex levels. Third, the company has made good progress on the operational front both in terms of reducing costs and optimizing production. Fourth, liquidity is reasonable at $853 million as of Q3 14. Moving on to financial outlook, EBITDA could come under further pressure due to weaker commodity prices - however, 2015 hedges are solid and we see less downside risk to our current estimate based on the revised -$55/S3.75 DB price deck we are currently using. The company should go into a largely maintenance mode in Haynesville or even below that if current strip prices persist. With medium term price expectations of $70/bbl, despite weaker economics, we see the company continuing its drilling in Eagle Ford. We see total capex of $460 million (versus —$435 million in FY 14E). Overall, we see this driving a cash burn of -$350 million through FY 16 - therefore, current liquidity is sufficient. Also, PDP buyouts in the Eagle Ford (for wells that previously reached the required rate of return) should enhance revolver availability marginally in the short term. Overall, we acknowledge that like many other lower tier HY credits in this commodity price environment that XCO is also under stress. However, yields have also widened significantly over the last few months factoring in this new reality. At current levels (YTW:16-18%), we see the risk-reward matrix favoring the latter due to credit positives discussed earlier; the most important drivers of this view at relatively better 2015 hedging (top quartile) and through cycle liquidity (2nd quartile) of XCO versus similarly rated HY peers (B/CCC). We are positive about its high quality gas asset in Haynesville - despite current weakness in gas prices, we see improving S/D dynamics in the US market over the long term driving a more sustainable business model. In the interim, we see current liquidity levels as more than adequate for getting through the next couple of years. We maintain our BUY rating on both the XCO bonds. Downside risks include weakness in operational performance and a further weakening in gas prices. Page 72 Deutsche Bank Securities Inc. EFTA01097726 13 January 2015 HY Corporate Credit Energy 'Figure 62: EXCO Resources Financial Summary Imp .M CSC 711411.410,4 Oa Mt 10111010/ CCU OHM/ 410714 507714 Ms) o% nes 41407II 440017 MN s toMao isccasaw 'flan MS CO O an III TO 144 so 01 Nana 0.044•1404040, 040 • Can 440441441. MIAs... MS MO PP 03 III TO 744 dIJ 0 k40910444 72 77 0 a a PS PM 20 PI 4400 444$10040.101 II 0 01 113 1 114 114 UR a 011,414.04444 444 TIT IN IR 41 04 WI es al 70* 44 OD P N al RJ 101 017 a N N a a IM 713 Fon 24 )4 2 144 44 73 IP 417.100.4 0 23 34 142 77 .0 0.00141440404 0 21 23 4 011 IS 10 04 SO 6. 4•04.4 i RD i IN ax LIP PC 1.100 04.1 POI ila 0 1 a O. 13 00/4 a In 0 sepr• POI Pa a i Q O. 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Figure 64: Commodity Price Scenario Analysis: EXCO Resources Forecast Metrics -‹ e k C I 3 61.76 FY 1SE EDIT DA :5, $2.71 025 6315 226 saga NYVFX $1.76 $225 riliE $2.75 rcr I S !fir h.., 4125 13.71 $42$ $4.76 R B $10.0 $157 $187 1217 $247 $270 $299 1215 $300 06861 0641) 15316) 3201 0210 (041) 1130 a; $0.0 $172 $202 5232 522 3285 $.0 1329 $40.0 03541 03293 MOO 132711 02801 ($235) 11222) a $100 MO $70.0 $186 1200 $214 $216 $230 $244 1246 1260 1274 1276 1230 5299 $313 $327 $328 042 $356 1344 1358 $372 $004 $70.0 ($3421 03311 (4317, 0300 13292) 13280 11269) 152671 15201 0246I 02361 0220 ($212) ISM $198) i En 0345 ($3191 0294) 32431 (2241 1 $90.0 1229 $259 12199 $319 $342 $371 $381 $80.0 0307) 0280 15210 02321 0011 OM) 15176) 1 $90.0 $243 $273 $333 1333 256 5385 $401 $90.0 ($2951 (270) 13240 3 2201 0 201) 0 1761 ($163) FY 16E EDIT DA ;5' Whom FY 16.E ICE IS 1/1,11Lon NYMFX Gn. :S 22 2.1 NY1,1FX Gas SI.,. $225 276 0.25 $67. 54.13 $4.73 SITS 5225 276 1025 53.7$ $42$ 0.75 $30.0 57 $43 $94 1144 $190 6239 4289 490.0 03741 (1327, 112803 112631 MTh 0140 MOO $40.0 $15 466 $116 1166 $212 $261 1320 140.0 03521 0306) ($259) 32121 01691 0124) ma $604 $38 100 $136 $188 7235 $283 $333 5500 ono (064) 0237) I$1901 0 1481 0 103) 060 $004 $60 $110 1160 211 5:257 $305 $356 000 C$3091 (010) (216) 141681 0 1271 COO 060 170.0 $82 $132 $183 133 5279 4328 430 5700 02081 (041) ($194) 31481 ($1051 0801 1016) $0.0 $104 $155 $205 5216 1301 $350 SAOD $90.0 (12671 (220) 0173) 31261 0341 (538) 16 $127 5177 1227 5277 1324 1372 $422 500 (245) 0198) 13152) $1061 0621 ($171 327 FY 15E Net Leverage FY 15E Debt Proved Reserves (S Mere) 14211E% Gas IS mcle1 NYMEX Gas ISYnele) 51.7$ $22,1 215 $3.25 $3.7$ 5429 $4.75 $1.75 $225 $20 $3.25 0.0 $4.25 $4.13 130.0 113* 94 160, 6.9. 821 56x 524 593.0 518 SI 8 $16 0 6 $15 515 PS $400 100 8.7x 7.4a 6.* SS( 534 &Oa MO $1.6 $1.6 $16 111 51.5 $1.5 MS $00.0 90 Itax 7.0a 6.11 Seac Ste 4.7a 5500 MS $1.6 $16 $13 51.5 $1.5 MS $00.0 0.74 162 ttlx 60 50 48x 4.5x 00/3 $1.8 $14 $16 $1.5 PI $1.6 MS 5783 0.14 tax 6* 6.51 5.0 454 43x 570.0 $1.8 $14 $1.5 $1.5 51.5 $1.6 MS PLO 7Sx 882 Sax 5.24 4.4. 42* 4.1a 1810 MS $1.6 MS MS 51.5 $1.5 MS 00.0 709 82a S.Sx 40 ASA 4.1x 13a $900 $1.6 $13 VS $15 51.5 $1.5 MS '3E Net Le Iv 141 Debt Pieced Mete.' r %ILA. mclo $1.71 5225 $2.70 SIM WS $426 $475 $1.73 $225 12.70 11.25 10.7$ $425 56.78 $30.0 4252* 4114 0.0. 13//c 10.14 7.84 624 svo 2.0 $1.9 Sit $18 $I.8 Si.? $1.6 84/0 140.6x 310 17.6a 110 0.* tOx 5.7x 140.0 $2.0 $1.9 $19 $15 $1.7 Si.? $1.6 IMO UM 23Sx HA 10.9( 7.0 821 524 550.0 $2.0 $1.9 $18 $11 51.7 $1.8 $1.6 $400 350 18Sat 12.0 9.0. 7.19 Silx 4.8x a $600 $1.9 $1.9 $18 31.7 51.7 MS $1.6 VOA 2501 16.1x 10.0 8.04 114: 534 44x 5, 08 51.8 $1.8 $18 $1.7 51.11 SI.4 MS $880 190 12.7x 9.3x 7.1. I& 4.8x 41* $90.0 $1.8 $1.8 $1.7 $1.7 $11 III MS MO IS8x 180 82a 6.54 Sac 40 3.8x 590.0 $1.8 $1.8 31.7 $18 51.11 $1.5 $13 Source LboacHe &yr* 13 00 0 UI EFTA01097729 IFigure 65: EXCO Resources Benchmarks Hedge% 3Y• Awe 100 0 8 64 hidedWI:ma 542 00% 70110% 14 5 50% 43% 1% 1440 38 $34 40% ns nal: 7 19 30% 25/ 4% sninniy,„ $3 0 nu nit $3 4 20% $1 $20 10% $1 0% $1 0 .10% 10$ .8% 100 .20% • 15% -11156 (0 1.1E 2013 2014E 2015E 2013 2015E 2011 7012 2013 exCO 'Maine ootaaan eXCO swettang 011•00 .CO arta.0 r wart 04.41149 Olarg% nth Coo 91k% Cah01.11514014 1/ 114% 00 $35 0 819 no $45 $40 100 SOO Sa 5 94 140 $70 SG 5 40 $30 $70 125 12575 140 136 12 to 0 0 re 0 110 $30 12 $2 0 150 125 $40 52 $4 0 11 5 12 0 $30 12 11 13 0 $1 0 115 $20 12 0 105 110 tab 0 $10 ISO 100 ti 0 too 2013 201.E 2015E 1013 3714E 2015E 2013 2014E 1015E 4.02 etotadog .000 •1•40.141 San I CO SW a ..4/14 44,0414may SoigattOrtetior 04144,1Rare O.hM rnurt 350% ICY 7 7% 184 6 0, 190% 90c 18x 330% 7 Ot 1.4x sax 25016 BO. 124 40x 200% 5(k 10x 40 301 150% 084 MO% 900% 30' 08x 10x eil ml%15% m i1% 0449% 2a 04x 50% 104 02x 0% ME I 0a 004 201' 2012 2013 2013 1014E 2015E 111 1 1011 1013 1013 2014E 2016E .*co •11•••• OS 4xco .%e0.M SSP. .*CO ..a.0 soma •rt0 107•041 .Y•••1 Sasee Oduaotio ay* totHounidtot Abontsp Sumo* LP lodeXey NAV A411441140dien BB,ana Afidon Stdacattalotiob bah cowrodawlnom mat [wpm*is c. fswelp 00inpang. &Mind by C19 HO Mt( toollyearadgnviaset00410rtOraWMOOaSt00019 CHI( XEC,DA4FSOCCOMILCRP,111(10)(0EPARCSAIVST an:!SD Deutsche Bank Securities Inc. F. the (003w..lp 00enparva. not COSS,: by 081,91Yeett abn frt•taffik iipura. fear 8700/71Ali(7C0rtiOWAS 40410.1013 6/70. AMEPERAR8CO.CMFAII4E-Pg1MTN.ACHIW10.0.4$PEPVAROSCSMSEVGEN,SMIFTIA. YEW eftel WPX EFTA01097730 13 January 2015 HY Corporate Credit Energy Forest Oil Relative value When the merger between Forest (FST) and Sabine Oil & Gas was announced in May 2014, it appeared as if it would trigger the CoC provisions in both the FST bonds. But, with the collapse in oil prices during Q4 14, it became increasingly clear that the new merged entity would not be able to refinance the bonds. Nevertheless, the two companies went ahead and completed the merger plan in December by circumventing the CoC clause (i.e non-FST shareholders owning >50% of voting stock of the merged entity). Under the revised transaction terms, while Sabine shareholders continued to hold 73.5% economic interest in the merged entity (which will be named as Sabine Oil & Gas), the voting stock issued to them was limited to 40% with the balance issued in the form of non-voting convertible preferred stock (with no conversion permissible if it would result in Sabine shareholders owning more than 49.99% of the merged entity). FST shareholders therefore continue to hold the remaining 60% of voting stock. With CoC option completely removed, FST bonds now trade as a function of the (highly distressed) fundamentals of the new entity. One consolation is that the overall new entity has better scale and superior asset quality compared to standalone FST. However, in the current commodity environment, even the combined asset base still implies an unsustainable business model, especially given the high leverage levels of 4.9x. The three key assets of the new entity are - East Texas (Cotton Valley/Haynesville), Eagle Ford and Granite Wash. Of these, the first two provide only modest retums of 17-27% even at $90 oil/$4 gas and therefore would be largely uneconomic at our current price deck of -$55 oil/$3.75 gas in 2015. Only the Granite Wash provides solid economics of >100% at $90 oil but with just 33.5K net acres, the inventory is limited. Given the above, we expect that the company would limit itself to a sub-maintenance level capex program in the $400 million range over the next two years driving pro forma production decline in the 10% range during the corresponding period. We see EBITDA of -$350 million in FY 15E further declining to $250 million in FY 16E. Cumulative cash bum through FY 16 should be in the $450 million range, largely exhausting current liquidity levels of $480 million. More worryingly, it points to a business which cannot sustain even sub-maintenance level capex. By end of FYE 16, we are also looking at net leverage moving to precarious levels in the 11x range. One near term positive in an otherwise gloomy picture is the company's strong hedge levels for FY 15E (84%). In summary, we are looking at a business, which cannot sustain beyond Pie 16 under the current commodity environment and likely cannot sustain under a long term price deck of $70/$4.25. With current bond prices in the 30s, we do believe the high risk of bankruptcy is somewhat factored into the trading levels. And, the company does have runway through the next year due to its strong 2015 hedges. However, with significant leverage and limited liquidity options, the risk around any RBL over-advance situation if the banks take down FST's borrowing base is real here - and would be a significant further negative for trading levels. We are therefore moving to a SELL from a HOLD on FST bonds. Our previous rating reflected expectations for a CoC that never came to pass, while our new rating reflects the current commodity market realities and a higher than average risk of default given higher leverage and less liquidity versus peers. Further, the company's assets do not look to cover debt even at current trading levels in the 30s. Yields in 35-40% could at first seem like a cheap option to investors, but we still see downside from current levels. Upside risks include improving commodity prices. Deutsche Bank Securities Inc. Page 77 EFTA01097731 13 January 2015 HY Corporate Credit Energy 'Figure 66: Forest Oil Financial Summary Pa 11044 MIMI 1/414414 NO Oa It Pa • Ma Nat abro 4 4.1100,4a4 CPI. la 0400 140011 PPM I MIA Mai CeaSta•MCC (Moroi. rPt Mast, I5.1•• VI 110121 )PAS am Coe 4000 Pa reesao, la 65.444 09044 11010 IRS I., a a 0 .41 A 0414111040040.11.440 Cala. IMok a Aar. 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EFTA01097732 IFigure 67: Forest CH Deutsche Bank Securities Inc. 02020 1.6 49 41 s IN IM 104 IK ▪ 4401 aN 64.701.010004nrStal. eh tee» rt tart 0 0 0 ti Ie) ne in In ns n3 (cc 00. na 424 40 074.00 »Is 54 i ta i 44 4) 49 46 20 til mI oe IN oe 10 On On 1415 042 En 9100 WI (1031 OT) D/ 0131 Iq 1011063 tibet 04 5•1 4115 112 449 »4 S iaat...ka Otet.I.Migt,tbaY• 411170IX 444411445.4474 Jc 04•41 144 W 312 141 344 S NO 21 11 Y 54 M 61 57 244 444 2» 172 n til 119 11 4 is 20 n n 3) 114 .1» »I 214 10 ss Ot 60 is 14 14 i i 34 23 » ISO ISI 142 li 4S 113 1» (IS 40 3 Ob 051 ni in 61 2.15 141 16 20 Wi ini 000 15 75 114 1471 1271 114 Ca) n ut 021 061 10.1/ 087 051 IN 14 01 3M 711 0.00 79 1$0 at 060 01 113) II) • • 47 113 0) i 011 Pi 11041 . 01 . 41 . 01 Z.A I% 0 1341 N 020 ;ni Otq S al en 141 I00 353 »P 04 04 it 414 212 141 344 S S til »7 04 IR ne 2» KO 744 70 1411 244 ni 244 S .7.0aWitaisIttio et 1141.93 11026 12110 4624 Kien VMO 1614 17493 19434 N(14 P» Ot 4114i VA» 01614 teert Niet taant Mn 5494 Me PP la» $374 M.T. lan ME Mn 1113 Mn 5127 Pn fa» Et eelt Ie Cyngars Náln 00 tets »vit 0446 u15 4.430 4267 oen* I&34 15091 i1450 inin 101.132 n .444 NON 14001 n* 4930 n04445 nu» ui.. ~di 1334 Ui 41.14 5411 5417 Mn OOI 1443 41.93 KM la51 lint 54.4 1443 PM ...mix 01PofterM iet 744 291 331 916 02 he 7» 710 ion 2109 3.1» 7273 130 400 2/03 +..441ø0441140 16.44 10$ KIM 20.12 47141 4124 121213 47404 17330 lati en» S4 031 1014 161.14 7.74 mep WAL 5511.4Ma 411.154) 110 lei 271 1M C47 4.14 415 vo 3.7» a ns 340 30X 7,47 2.4» 2240 ;04 »3 941.$44 Sem 1$45 1194? 11406 121h 11412 3492 11332 1004 In n 010 19210 1200 114.43 In» 13311 3.412 la ge •103 2100 2401 23.274 Zilt 14623) nam 'pan». 21057 »aa Oini 4425 ni 54.45•11140.414142140 41M 414 137 702 557 511 1/72 50 277 ef4 5» om ca 550. 4» 1577 le» 14744 la 4171 .4» 3021 3.110 >3.534 aas 23 133 1.34115 5314 0 ni 1444 ni Cs....s.nAnta....«. »H 021 Q12 $11 01$ IVO 94.11 3440 34, 44 nM 3426 3414 9441 2941 gl.vonn 6~401anikapeasew 114 $130 Mn is. *n n» n» Pa SP 4.41 nn 140 WIT pm 9144 e$14 NM 141.1 iel -1,9 Gab 1274 L114 55//) Si te 1741 91411 51.1 11,41 nu n» 31.0 si 37 L142 11.41 $144 11111 1•91 SOM 5000 n 53 SOM 54/52 n 53 5•414 WAS 95411 SOM Mn 1512 5114 II» II» 1.10 12 10 12» 143) 1130 e» 1157 1147 1234 12 V ni? 1230 e» Sin 1541 41/4 na 11.34 51.12 n» 41.44 tva 55.34 Il.n 59.» 1045 11.37 5454 1109 144 519 53I0 11.09 $1.94 SIM 1109 Mn 3143 91.17 iiI se $3.34 1741 310 140 410 4110 $110 140 1410 Nl0 1411 11.11 1403 en 1410 010 140 MM 1.154 1334 usa n4 P1 13.54 1754 1314 MC »n fan P54 11.54 P54 p» na en 1414 5447 1434 5244 M.N qM 0,44 31.B1k2tage • s slens!..1a . k 1 11,45321.21z a ai el n 44 P 4$ 04 01 417 141 M4 150 . • • ' • 114) III 75 i n 00) Oen 0401 000 0141 11411 0~1 nel OS RIO 14419 OM <Iq n 3 5 04 041) 34 OM I 04) n 01 0535 V ni 01 551 17771 14101 ala (6 rop ge 000 " (411 MI WI) 00 p» 11311 010 030 te 0541 066 040 041 1411 00 031 1314) all nel 117» Om 1101 Dal 10 03 171 241 1317 202 N .0 41 44 114 00 MC 939 ti 0» Mn 31 lil» OOI »te te Ooit 44 is st • • • 20 3 0 .34 . . t.w.:. »ia Oss KO 40) 400 1/34 .246 ..441 1346 inf. »43 1.40 Ie 00 014$ ken 0546 ce nat 13 414 5» in €43 no ns 05 4I4 €46 445 .0 Telt. 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FY 15E Fel- 5 IfF 4 '8_e Eg` 51.75 52.21 $275 1325 5175 µ26 51.75 $225 $225 1325 53.7$ $425 54.75 it. -2 Via $301 3107 1.312 1315 5323 53111 $314 $300 31021 3130 maa 151831 O114I ($UG) 15205) 919 $731 $335 5331 $327 540.0 ($1761 ($177) 1177) 151771 (3/701 ($190) 15200) n a $41.0 $660 1514 1326 1339 5312 5345 1325 5339 5350 5344 536 1348 1161 1343 1356 5339 5352 350.0 5500 (51711 (50161 (51721 ($157) 11721 1167) 151751 151671 ($174) 01169) ($105) (WO) (5195) (5190, k Via $70.0 1/362 9W 530 139 5374 £369 965 5700 ($1611 Me/ ttlf2) 151621 (31641 ($175) 1$124) 5660 $362 533 $314 $379 $394 5379 5375 5860 ($1561 ($159) 1150) 01511 men ene 3182) $20.0 1371 $377 $383 $389 1393 5389 $385 $910 ($1571 ($157) 3158) 151581 ($1591 (5170) (516) FY 16E EDITIDA (5 Million. Y 16E [GE libIlLow trvairx G ni, 5, $225 9125 $335 5425 5675 51.75 5225 5275 $325 $3.75 5625 54.75 51.75 *75 41 $115 1140 5165 5190 $200 (1.4771 (1451) 11426) 5401 (13751 ($350) 11324) $30.0 565 593 SPA 572 $97 1122 5147 5171 5196 5221 $40.0 (54451 (1419) 11394) 014 (53431 ($3171 15292) $103 5126 $113 $170 3203 £226 5252 $50.0 ($1131 ($3571 3362) $205 MIG 3205) WO)/ $60.0 540.0 $135 $159 5184 5209 1234 5259 5284 $60.0 ($3811 33551 15330 3304 <32791 32531 11341 51611 $191 5216 5240 1265 5290 5315 5760 (13491 ($32) 11296) 1272 (12471 ($221) (5196) $70.0 511)? $222 1247 5272 5297 1321 5348 510.0 33170 32911 (1246) $240 MIN ($IO») 3164) $10.0 nes na $253 12713 $.93 $325 $353 93 190.0 .12511 4234/ $204 3 1531 ($157) 41321 FY 15E Nel Leverrage FY 15E Oebt PICIVed Ret.CnICS (5 LIclej Ipl uniE X Gas 15..mcte) $225 5375 5125 $3.75 5436 5/75 5225 9275 5925 53.75 14 $4 51.75 8.0. 7.94 00x (1.2a 5)00 Sa I f4.1 54.1 f4.1 94.1 11.1 NI $3110 BAx 111. 6.o. $40.0 11.1x 79x 7.8x 7.74 7E« 7.7x 78a 540.0 1.4.! Ui 34.1 US 4.1 1A.1 14.1 7.7x 713x 7.54 7.4« 7* 7.4 75a 8300 34,0 $4.0 $4.0 $4.1 34,1 34,1 $4.1 SA 7.4x t3x 7.2x tb 704 11x 72* 8600 34,0 $4.0 54.0 $4.0 34,0 34,1 $4.1 000.0 $70.0 721 7.11x 6.9x 6.1). 6.7x 6% 70* 570.0 54.0 54.0 34.0 540 34.0 54.1 54.1 ton 6% 4.8x 6.7x 6.6. 66x 5.7x 68* 580.0 54.0 54.0 34.0 34.0 34.0 54.0 54.1 67x 6.6x 6.5. 64x 6% 6.6a 8920 54,0 54.0 34,0 54.0 34,0 54,0 54.1 $50.0 62X FY 16E Nel Leverage FY 16E DeE1Pleved Reserves (S'Mcle) NY11F X Gas ( le NYILIE X Gas (5.Yncle) $135 5225 $3.75 54.23 µ75 51.75 6225 3275 5925 $3.75 431 4.75 $ 45.1. 32.* 25.4x 20.7x 17.5x 15.1x $30.0 94.8 549 54.7 54.7 14.7 MI 14.6 $300 7431 41.3x 304 24.0/ 10.74 113.7« 14.5x 125* Lt ~0 14.5 $4.7 $4.7 $1.6 NA 54.6 $45 $400 22.75. 10.11/ 11).1« 143* 12.4x 11.1x 150.0 54.7 $4.7 $4.6 nl 54.5 54.5 $45 PLO 21« 500.0 215x 18.0x 15..* 1334 119« 10.7a 9.74 560.0 $4.6 54.6 US 545 54.5 4.5 $44 14* 13.04 II. 104x 9% 5.7* 8700 $46 54.5 54.5 $49 54.4 54.4 54.4 OOG 1793 14.3« 12.6x 1124 al. 03 lix 7.0x $500 14.5 14.5 $41 MA 14A 54.3 $41 $500 122x 10* 9.0x 00. 024 7.6x 7% 590.0 14.5 $4.4 $4.4 51.3 14.3 54.3 $41 MS Saum 0~.~ Stat Deutsche Bank Securities Inc. EFTA01097734 IFigure 69: Forest Oil Benchmarks ro n as Medie% h0100110•Geowi 14 5 200% 161% OS% L1 E :g 1506 135% n a 1735 100% 506 t16 $20 i tn 0% $1 5 t10 .50% 105 .39% .4914 400% 100 2013 2014E 2015E 2013 20146 2015E sf110 ~tø alumn etg,/ .ivuet, Orøø14•114.01•V %de casa caritas Oasaq.141MtArs rsecyce•ctst.1:41/14 135 ta 0 110 173 529 t6.5 111 ti0 0 t50 141 170 12525 tio 5 t70 125 n 30 150 840 03 550 110 120 150 110 $40 610 II 5 $30 130 SI 0 t2 0 520 120 105 S10 110 Slo a0 too t10 10 0 201; 2012 2073 2013 201E 2015E 2013 3014E 20ISE 2013 2014E 2015E eltr0 -g-r IMmn .pi0 eMiese 01~ afro rami ~4n ein» *ymse 9 +Mt01. 160•11•1~110 160% 131% 90. 140% 1 4x 70x 120% I 2x Ox 100% 11% h Ox 13051 013x 40x 60% 00x 30t 40% 04x 2 20% 02x 10x 0% 00 2011 2012 2011 2111 1012 2013 2013 2114E 2016E afro eile1•11 *FOTO møtet@ ~On r@10 wwm@ ~Øm Sam» INuaö.11". et~da Bloontis Al~e LO ~stry tusl~4 Malim13B.nal Afti:fanI MitoRa "Va costedardnon. A1 ~amen Fot". Agbiwnp ~vit ~al ty DIDA* I1/4 « zro listens Nuv.; tatt publåAo as~. CH1( XECAIDXFST.XCO,HILCRP,HI(NFX0EPARCSANST åndSD Fos th.legbiwnse COrtly»At. cosnic by 08 Kgf 1490( elm 'brunni Fpunis adlw Bbombårg~sus ~VM. <kW AMEPULAIISCEACY4FANO.EPELISCIVAMWPO.0.4SPEPVAROSCSN,SEVGENSµTPLIµRW ISPX EFTA01097735 13 January 2015 HY Corporate Credit Energy Halcon Resources Relative value In the face of the dramatic downward shift in commodity prices over the last few months, the question hanging over the lower-rated credits is the sustainability of the business model itself. For Halcon (HK), given its high leverage levels, this issue is even more relevant. In this context, the revised outlook provided by the management earlier this week is a major positive. The company said it would contain drilling & completion capex to $375-$425 million, sharply below the $1,100 million in FY 14E while keeping total production relatively flat. To place the new plan in perspective, it is just half of the previous capex budget provided in November of $775 million while production target has been taken down by just 18%. The management is achieving this by halving its rig program from 6 to 3 - two of the rigs will now be focused on its best asset, the Fort Berthold acreage of its Bakken play. The East Texas Eagle Ford play, where the company had previously planned a ramp-up, will now be allocated a solitary rig. The revised production target also means its oil production for FY 15 is now largely hedged (88% @ $87.29/bbl). We therefore see EBITDA of $655 million (only 15% below FY 14E levels) with a modest cash burn of -$75 before asset sales despite a heavy interest burden of $185 million (about a quarter of EBITDA). We see a largely similar financial performance in FY 16 as well - flat production levels on a -$500 million capex program though driving slightly higher FCF bum due to lower realization levels (negative $85 million). Liquidity, while modest at $797 million including $95 million of cash, will be more than sufficient to manage the revised drilling program. Overall, while leverage levels will stay elevated (5.8x by FY 16E), the company looks reasonably well placed to service its debt through FY 16. The longer term outlook is more challenging however. The inventory of its best asset, Fort Berthold acreage is limited and will run out over the next couple of years. Therefore, run-rate maintenance capex in the medium term will increase to above the $400 million level. Its other assets -Williams acreage in the Bakken and East Texas Eagle Ford acreage - have considerably weaker economics, which require $80/bbl VVTI price to generate a 20-25% IRR. That said, we see the company driving considerable reductions in well costs - both due to greater efficiency and softening service costs - neither of which are factored into the above analysis. Going forward, we expect both assets to be economic at our long term oil price outlook of $70/bbl. On balance, we acknowledge that HK, given its high leverage levels compared to other B/CCC peers, is more vulnerable to the current commodity downturn. However, we continue to have a constructive view on the credit since we believe the risk-reward matrix is attractive. As we noted above, strong visibility from its robust hedge position and low near term maintenance capex levels provide relative stability to the company through FY 16. Longer term, we see the business stabilizing on the back of improvement in medium oil prices from current levels and strong cost efficiency gains. Admittedly, our earlier expectation of meaningful deleveraging over the medium to long term driven by strong production growth does not hold in the current environment. But with yields of 14.5-15.5%, one of the highest among B/CCC peers, investors are being suitably compensated for the additional financial risk. In particular, with bonds trading levels at or around 75, the company is trading close to our expected 2014 PV-10/debt level providing reasonable asset coverage. We maintain our BUY rating across HK bonds. Downside risks include extended period of weakness in oil prices, weaker-than-expected efficiency gains. Page 82 Deutsche Bank Securities Inc. EFTA01097736 13 January 2015 HY Corporate Credit Energy 'Figure 70: Halcon Resources Financial Summary Mw 7000 wa NODS IC MA 594A MA Caligatii47014.41a4) ISJIM 114116 10464 11623%Sc Man C91131/0410:C•1111414) 14164.21 13444•4 43444 .414416 A Mir Calit1/0410tC.111/041 Wen 13.443 it "al rea 101 114411441114044M!1400 • Cie/0/4 NON. wo firma 104 20110 CON IOS itti a 410 e. 03 2.44201020•441/ foal MI ark/ 071440344 le 143 us a Sr S. 4374 70 14 114 MI 36 141 II 31 10 AS OW 4I 27 IM ID 4.414.4.44.1.44 a s ICIP 0104 IMO 1/1 61 0 •• 0.00 In .441 nt,00001. 0.1117 onl IM 049 1.00 • .0 , 144411 /1444413 l tonartmea3 14•4411 1410 01 1,11 111 nil ens at 40 IL MPS 11.L111 111. 026 1411 049 0 02 al IDS 644 70 763 IN fa . rut970.44.41.4•41.49at 143 en 644 74 11.1 111 In WTI .11411113140 1012 304 0.0) MOO /151 3,223 ale as I. tau 4, OA 14•411 SM 3 VA 4/2 414 LM 42 4.41 243 AN 4,111,94444124.4 •, piry NriN Vas 07).{.6, u.%Ii LOIS LIM INN Sao IMO AA Zia 414. 4.5 ....1441Nant twx• Final 5.70 447 146 477 a,. 4t9ro3114.434131 Ma1 MM air 244 322 391 Ira NM 201 ISA* •4441.9 IT. 09, 04.0) MM Na MM 021 MM 044 IOC ,4144/1A4 Mama 44 Otto 711 227 34 221 366 012 344 412 ..s pari W4/. 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Page 83 EFTA01097737 'Figure 71: Halcon Resources Financial Forecast 106 45) I NI 140.0221n410004 /11.3661.9•0 P04110301 IN Ite.w.a• 775 37/ 307 21? 154 1114 103 WI 104 240 035 IMO 70? 1:4> 04.0(3 Can N 0 93 111 79 IP II 0 DI 135 213 an 211 3)) 0404 H.fln Ca,: 5.1.1 PI (III P1 42 140 71 03 II (0 ? 001 12 234 141 tarn:awn 11•43ti IN 113 WI 157 IN 153 IN Ill II IN COS /TO Of ON COI 120 133 IN III 120 IP 146 151 21 N 441 603 654 41( ENT BO 3) N 30 4 14 IS 16 20 29 III 40 96 II (Imp 31 30 N 30 4 4 4 46 1? 31 61 IS On ?)2 101.0.0010/ It 41 2? 40 2 07) 113) (30) 2 40 03 0 MI 00 Otte aro,. it Anew 31 IN ORO 01 Of It 1331 00 smantp. 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NA HAN 14.1(4 1,470 UV HAN 3110 $11.63 044 NM 14) 000 1000 0404 1107) 013) 11220 DOW 1062 61429 1014 MK. 11166 13477 160 /1142 MS) 174 31(441.0300044 14.19 14 19 11419 la 19 1419 la II 1419 14419 MIA 16076 14 19 41.19 14.19 16t • 3 ....171,14•1101•941 2031 0572 50 12 05N 13512 11532 MN 5072 IPA 71210 Sao 2031 2031 13%.1 Jl qb..m N IIIA0 04512 54137 NS 03011 IOI0 5757 404 16444 540.43 M. n /42.0 PmNO Plan( (1)110/0.0 1440,” PO 213 WI IN 174 163 III 141 a 120 (05 Ti) 656 611 3201313 7.41 00 a (9i 74.1.144074 (5111 NIP MN MO MN (IN) MN OW 00 (620 COOP 03411 PIA 401 4 }U100110101rNaroCepu 0 0) 3 en $104) 37 PI) 19 0 63 (01 I) I It) rat ANNAN (a CNN 5••••• 020 OM 11371 13241 MX 04 4 170 01 OM 0 oni 0111 In to ••••1Xya Cualiel Plan 31 31 33 31 53 35 53 20 I 12 21 IN III 2): a •4 Cul% lisew MP 0141 117171 PIM 0141 II MI II (C (MI 05131 CON' (731 111 Amino. • ' ' 09301 031 Owed 0 Axon • 01 IO • 4 21 4 4 0 32 144 an MO Fes 04 Pow 140 4740030 (MI IN 0641 MO 04 4 (if) IN CP 060 (INil (0141 27 PI 0144613'1100 :05 0 101 56 0 1 3 0 21 Deutsche Bank Securities Inc. -Soo Noe A Orto 3.157 v4 3102 110 1110 1110 3110 2.160 IX,/ 3.1115 3.10 3.142 3.14> - Cm* Inas 344 750 345 5C4 03 570 NO NG 232 X2 5N Cl ht) ...asl I'mr rnembl. 3521 341 034 307 3745 3321 3741 1.140 192 210 3.110 360 3061 3.74e NYSam WOW:4 014044010,43,1145540110100/NONG•N 43% 4014 4% 04 004 160% Ma 21% la 900076 000 411. 44% UK 1414 Na a I% 0% 1004 260 4% 1% .0' 1.11110441415490k4 301103.6C•sh arse the. 00400 vittno 274 Lb 2A• 2.54 Ns IA* 23* 2.14 Lk IA. 30 25• 3I* 21. 41401110M 14• 44 404 4.O 424 5.3.• 504 544 40 IYA• IN 6.4• SO 51, 140 04441010440 SA• AM 45. 4.O 40 5.3.• 541. 544 40 17A• 13* 6.4• SO 10 4010401000149411 MAO 26 36 1200 12719 12791 12716 12796 12710 069 ION In 43 12719 12710 1274( ...140190•03 Nvelq400.3340.46 Mkt} INN 1013 143 1673 06030 $9)04 INN 147.49 1010 414 16033 $7.70 $719 $9.37 54001 090440013031.04 04400 439 EFTA01097738 'Figure 72: Commodity Price Scenario Analysis: FlaIcon Resources Forecast Metrics M -‹ c) g 01 FY 15E HUME (S. lhon) FY 15E ICE I5 IC Iron O $1.75 Mal MTh 10.25 $676 $42$ $4.75 $1.75 $2.25 WO $5.25 53.75 $4.25 TO a $800 1603 5593 $593 $590 $583 $505 1497 $19.0 (Slop MO) 0101 1$10) ($101 1591 $7) a; 8 $44.0 884.8 $617 4fAl $617 5641 1417 $641 $617 $641 $617 $641 $519 $643 $621 $645 6.0.0 $50.0 $5 520 $5 $23 $5 $20 $5 320 $5 520 $6 $21 9 $23 a MA 1665 5665 $666 $74.5 $665 5667 $689 960 535 $35 $35 335 535 $36 $38 ONO 5649 $68? MI $518 9389 $681 $693 $700 .90 $30 90 $50 90 $51 $53 $83.0 $713 5713 $713 $713 $713 $714 $717 $80.0 549 245 $44 $55 545 $46 SU POO $762 $762 $762 $762 $762 $784 $766 $91.0 598 $93 $98 396 598 $99 $101 FY 16E E81108 (S Millon) FY 16E FCF (5 IAlll ion) /4Y1,1FX OA. 51.75 $225 1275 13.25 $3.75 1,425 $4.75 $1.75 $225 $275 13.25 4.75 SIM $4.75 130.0 957 4440 $463 $414 $468 $471 6.474 $90.0 42501 4249) 4247) 112451 42431 ($26% 4239 $400 $511 914 1516 3519 $622 6525 926 MO ($291 ($202) 11200) 01901 ($1961 ($194) ($191) $404 945 6547 $570 $573 $676 $579 $502 $50-0 41571 ($1651 16153) 161511 4160i ($147) 1944) $80.0 $610 $421 $624 $427 9)30 $633 $635 $60.0 ($1101 ($109 16101) 161001 OWN ($100) 13381 $70.0 1472 $675 $678 1580 $683 $586 1489 $70.0 (1841 11821 11031 1150 01551 (1841 11511 SA $726 $729 $731 $734 1737 1,740 $743 $40-0 ($171 115) 4131 ISM (181 171 1541 MO $782 $785 $7413 $791 $793 $796 $799 $900 $39 $41 $13 344 546 $49 $52 FY 15E Net Leverage FY ISE DebtProyed Reserve.: S 51c e1 NVSIEXOa* (5.6fc/e) tenIE X Gas 16mcte) $1.75 $225 $3.25 $175 NM $4.75 $1.75 $225 $275 $3.25 $1.75 NM $4.75 $90.0 63x 634 6.34 6.34 6,9 63x 624 $30.0 44.6 46 $4.6 $4.6 $4.6 4.6 $4.6 $40.0 60x 607 6.04 6.04 6,04 601 604 $40.0 54.5 $4.5 45 45 34.5 515 115 1504 547 Six Sex 6.4 544 57x 574 $600 $4.5 $4.5 $4.5 $46 34.5 545 $45 MS 5Sx SSF 5.52 5.56 591 5.5* Six O $60.0 54.5 $4.5 $4.5 ils 54.5 4.5 $4.5 $ae 594 534 5.34 544 524 Us 6.34 $70.0 54.5 $4.5 Oa 54s $4.5 4.5 $4.5 SA 5.1s SIX Six 5.1x 5.1f 5.1x Six 64930 54.5 45 Oa $45 $4.5 4.5 $4.5 SS 4.7x 4.74 4.74 4.14 4.74 4.74 4.74 $930 $4.4 44 f4.4 44 44 14,4 $4,4 FY 16E Nel Leverage FY 16E DebtProved Reserves (Slide) NYMEX0a4 MIME X Gas (SYnele) 51.75 $225 $175 63.25 $3.7$ $423 54.73 51.7$ 5221 57 75 5.25 $3.75 $4.23 425 $30.0 8.74 4.74 8.64 8.6( 854 8.4x 8.44 $30.0 54.9 $49 149 $49 $4.9 62.9 149 140.0 7.7x 714 7.64 7.64 7.57 754 7.44 $40.0 6.4.8 $44 $1.8 41.8 14.8 14.4 Sad 5504 Six Mk 6,04 6.7. eh 677 667 $90.0 $4.7 47 47 $47 14.7 $4.7 $4.7 900 027 617 6,17 67. 1704 60x 607 $00.0 $4.7 47 47 $47 $4.7 $4.7 14.6 $70.0 5.6x 5.57 5.54 5.54 5.5s 5_4( 5,84 $70.0 4.6 146 34.6 $4.6 $4.6 4.6 $4.6 $80.0 Six Sax 5.04 5.04 Sett 5_0:4 497 $50.0 £445 45 $4.5 $45 54.5 4.5 $4.5 MO 467 4.67 4.67 4.54 4,57 4.5x 407 940 44 44 44 44 $1.4 $4.6 $4.4 Saoot Eteau44.4 EFTA01097739 'Figure 73: HaIcon Resources Benchmarks Realluttiatt8•• 4•4081*(18441 VC ONO% 0) Ot 1 A55 1801 i t% POO 593 1618 1605 144 2 61% 500 51% 510 3 $401 41% 1110 0 11 i20 1400 POI smile 30% 116 6 21% $33 0 $201 5200 nos 10% HO 0 1% 00 0 00 $01 2013 201E 2015E 2013 2014E 2015E All 7012 2013 Mt Skala nbtulin sit •1111.1011 -SM 0415 *WOMB oilier. 014nOlopItirgiali floe Cob*. 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I Souris> Douala* Hank concur./ dom, AMMO Hum* LP Weary Ss,ISCOAMMaliennandAfilcianS ?Atoka Mo'uthi both cowrodawlnon. moat( dormant For No IbOosvap corny:wits ““vtd by DI HO Ka Me betunes Aran alba our puttatoodan:non OK )ECIWIRFSVCOMALCRP,MCAOZOEPARCSMST andSD For Oa IbOosvap torniorsits no: cossetby 081fel YAW is fOnleaSfik igtvos new Bboorimip consoutd animas my: AMEPERAR.SCE).0(0,5440SPE,17SCA(1.4YAMPOOA$PE.WAROSCSA(SEVGEICSA(TPLMIZW end WPX Deutsche Bank Securities Inc. EFTA01097740 13 January 2015 HY Corporate Credit Energy Hilcorp Energy Relative value Hilcorp, despite its strong financial profile, has been an underperformer among BB E&P credits following the sharp weakness in commodity prices in recent months. This is attributable to its asset portfolio which consists of mature, conventional assets, amidst a peer group primarily focused on shalehight oil assets. In a weak commodity price environment, this places Hilcorp at a relative disadvantage as the company's per unit LOE costs are higher - $21.90/boe, almost double the peer group median. More recently, this was not a major concem as long as the oil market was steady and the long term outlook was robust. However, the contrast versus its more nimble peers (operating unconventional assets) is highlighted more given the current oil backdrop. That being said, we see several important offsets to the above metric. First, Hitcorp has a strong financial position with net leverage (pro forma for BP-Alaska acquisition announced last year) in the sub-1x range, one of the lowest among BB-peers and solid liquidity levels. The company also has impressive proved asset coverage. We estimate PV-10 s of FYE 13 pro forma for Alaskan acquisition of over $8 billion; even assuming a 50% haircut to factor in weaker commodity prices, we are looking at pro forma proved asset coverage of 2.7x. Second, the company has a strong track record in executing on its business strategy - a key aspect includes acquisition of mature properties and extracting value by optimizing production levels. Importantly, given its strong financial position, the company is well placed to take advantage of attractive opportunities in a buyer's market. Third, Hilcorp also benefits from a solid hedging program covering 58% and 38% of FY 15E and Pt 16E revenues, respectively. Of note, the hedge ratio includes fixed price long term contracts on its Alaskan gas production. The latter accounts for -20% of overall revenues and provides a key diversification from the volatile commodity markets of the lower 48. Its hedge program lends good visibility to eamingskash flow - we see EBITDA in the $1.1-1.2 billion range over the next two years, sufficient to meet estimated annual capex of $1.2 billion. FCF burn should therefore average -$100 million annually excluding impact of acquisitions. While net leverage should increase from current levels of 0.9x (due to decline EBITDA pro forma for acquisitions) to 2x area, it is reasonable for a BB-rated credit. Looking at a downside scenario of $50 oil/$3 gas, we see FY 16E net leverage should still be at acceptable levels of 2.7x. On balance, we acknowledge that Hitcorp's business model does place it at a slight disadvantage versus its BB-peer group given the changed commodity environment. But, with its yields in the 6.7-7.6% area trading in line with SELL-rated DNR, we see solid value here. We therefore maintain our BUY rating on both the Hilcorp bonds. We see DNR - with its high cost, conventional asset portfolio - as a good comparable to Hilcorp. Hilcorp Notes '21 (YTW: 7.3%) trades largely in-line with DNR Sub Notes '21 (YTW: 7.5%) - we see better relative value in Hilcorp given its better ranking and significantly more resilient credit profile (1-2 notches higher credit rating) driven by a meaningfully stronger financial position (FY 15E net leverage of 2.2x versus 3.7x for DNR). Downside risks include extended period of weak commodity prices. Deutsche Bank Securities Inc. Page 87 EFTA01097741 13 January 2015 HY Corporate Credit Energy IFigu e 74: Hilcorp Energy Financial Summary la las N_ MI.. RM>. n a ea, an 14.1.919 154021 199411 Inca :44•144.4 Pal 00. ,,..„ 7, '0.9 ..is 51<[nea,du NAM A., FN. fl rlagMEMMIEMCMME084 has 201 1.011 SAO 1140.010411410 /, -1 . ' “ `,0 M.111* III In 5% 05 202 'MI Owns Ons 227 246 SI) 254 223 a% IAN on 10 926 24(0044930.2. <Iasi • 3 4 Oa On • Pa 120 0 a 40770,12 on 1.90009 V. 30 231 313 MI 321 3712 NI 5$ 1620 X% I* 114 10 141 162 IP 04 2f) 431 313 102 ItO IFS 11$ VI 10 101 ea (tau II it a II 6 26 63 91 22 43 101 /441104ni 10 166 14 a MI III 05 914 44 {N 249,90•01.0 WO 11 ID M 10 70 5 43 0...1,0•0104ne. CM C4 SI 37 1.2) 00) 3 OM 11431 MI 7,• 4 ,49, 0 47% 6 II 11 . D la in. M W Ile uniti.t..e., 144 A Oa 137 10 at) 419 IM3 01 I I <II II) 0 0 4 I MA Fan. iltl 44 IN 114 14 Ma 4.1 l 01 Int 204049/4 •44;44 1.106 on 1.20 1414 1277 1241 041 IMO /4002011.0%.4 /Wm Ian 041 12/0 1.201 IM Cl LIU j a y wt., c14,4. ow, 041 1011 0741 tal 3210 12:7 1427 1411 0110 Non .. n, %..., ”., %I.•1 O. 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P! pap. § 44 900022 saartr g c w a 1 15 i ire / i I i i 1 iflil 3 -.i .- -t -tl ! oil S il , t 1b 13--lggi - pss ,1 s 6, 111 ill 11 A i Sit i IN li 1;02/51-2ti ti _gi! I .- I 1! II ••.i.5121i1 ril lit;r2 J al ifillfillig ig 1 1§:iggAgi, ss ilssi isibh E€! iii3/11111 1.401; Js 9fl Deutsche Bank Securities Inc. Page 89 'Figure 76: Commodity Price Scenario Analysis: Hilcorp Energy Forecast Metrics -` M= -‹ G3 Ed' FY 15E ERITDA IS Million, FY 1 5E ICI II Miro,. R B 11.7$ IA UM is).25 WS $4.25 St75 Sin 1225 1275 5325 $3.71 µ1 an MA 3734 1751 $766 $714 SOW $121 2647 $800 01.246) 11.229) 1112111 113941 111371) 11.167) 11.132) a; 180.0 150.0 1646 $967 162 $373 $879 1990 196 11407 $912 11023 $902 $1.043 $91 $1.070 $400 $50.0 01.146) 11.043) 11.12/) 01.026) 11.1101 11.0091 110931 1493,1 141.0757 (1974) 0 1.0357 1954) 1 1.030) nem a 104 $70.0 11.066 21.179 11.083 11.11 11.101 11213 11.11 $1229 $1135 $1246 $1.155 $1.266 $1.181 $440 19421 1925) 11907) ($6901 (16721 11852) 11827) En $1.292 $100 (INN ($6231 21416) areal 0 7711 (11 51) 1 726) $900 21.291 $1.327 $1,724 $1,341 $1357 11.377 11.034 180.0 1 7291 ($7221 0 704) ismoi ($6691 on% atm $90.0 11.403 $1.120 $1.435 61.453 $1470 11.493 11.516 $90.0 18371 16197 26021 asas3 INN ($5471 115227 1-116EEEINDA :5 Million' FY 16E ICS IS 10LIloa'. hYMLY. G.: . el tiMILX Gat :S. mcfci 11.71 $2.1 an 13.25 13.7$ $436 $4.75 76 $22$ an $225 $3.73 US $425 $300 5492 $521 $59) $579 $607 $639 $672 $300 t18251 1799/ 1773) $7461 17201 1690) IWO SOO $643 $691 $720 $749 $776 $1309 1813 $83.0 16621 MC/ 014/ deat asap COM IWO $500 $833 $862 190 $919 $948 $990 11.013 $50.0 ($6081 (1482) 11451) 114291 (1403) 1373) 11341) MO $1003 51032 $1.061 SLOW 11.114 $1.150 $1.183 $60.0 (13•91 ($323) 112973 11271 (ag ($215) (SIM O $70.0 $1.173 $1.200 $1231 $1.260 $1209 11.320 11.353 $100 11911 114) 1$131) 31121 ($161 ME 2241 SOO* $1.344 $1.372 11.401 $1.430 $1,459 $1.493 11.524 $R0 ($321 241 $21 $17 313 $103 $135 190.0 $1.514 $1.543 11.571 $IAM $1429 $1.661 $1.691 $90.0 $127 MR $179 1206 1232 $262 $291 FY 15E Nel Leverage FY 15E Debt Proved Reserve's IS Mcle) NYMEX Gas l2mc IC/ NYMEX Gas 'Sande, $1.75 $2.23 $175 $125 $371 $4.23 $4.71 $113 $223 $275 13.25 $3.75 $4 25 1/5 $300 32x 31. 30x 3.0• 294 26x 27s $330 $3.2 $31 $30 $30 $2.9 $2.6 $21 $400 26x 27x 2.6x 2.53 25x 24x 23x 5430 22.6 $2.7 $26 $25 52.5 $2.4 123 $50.0 23x 231 2724 2.2d 2.1x 21x 21// 5530 $3.3 123 122 $22 $21 $2.1 12.0 3 $600 STO 0 276 i .t 1.9x 17x 1.9x Lex 1.94 1.6s It 1.6x I.8x Lk 1.7x Ilii 1630 1700 $3.0 $20 $12 11.9 $1.8 111 11.7 $1.7 $1.7 $1.6 216 $1.6 $14 $OO 0 ' 15x L4x Ltd 1.4x 1.3x Ilx 5630 $1.6 $15 $1.4 $1.4 21.4 $1.3 $13 $930 i . 13. 1.2x 1.2. 121 It 1.1x 5330 $1.3 $1.3 312 $12 $1.2 $1.2 $1.1 FY 16E Nil Live:Joy FY 16E Deb09rove0 Reserve./ rS Mole: NYM F X Gas (5.bible) NYMEX Gas (Gmela) $1.75 42.3s 1275 13.25 $3. 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Figure 77: Hilcorp Energy Benchmarks Hedge% I rhtOLL11804 120 1 Olt l 5155 415 1128 m4 113/ll SI 1 7 „N H i 2013 2014E 2015E 2011 2011 1013 nu eleaan es elitist. 406 WhinDI oven Opentimiltergiati 844 Cab Get Site Cab 0.314•06 Vow 7411Cyd• Castilla* POO el 0 $28o 1400 1340 134 2 N2 144 I BID 0 1260 $348 $350 139 3 SIB 0 no 12911 $383 136 $300 247 $140 MO lea 511 91 00 $250 AS SO $200 171 $8 0 $150 $550 BO $100 II 118 no no Is SI $00 PO 20146 2015; $10 1013 2014e 2015E XIII 1011 2011 ~I. attain:mill Waal» _Minn slet07. •Millard• calstal ML •5144651111 eleckn la« lem1y Nast" Rimern 0•141114TOAIC 605b 62497% 44519% 130x 112 35x 27 204 50.56 70x 301 4056 804 148 14d5 254 nri 50x 2 ex 30 4114 13 3" 12 le< I1 10 304 02 fJ 20x 1 ex 10 lOx 091 0 00 00L 2011 2012 2013 2011 2012 2013 2013 2114E 1016E S. ilitidinIN OYWe •14L ~WOO C1.1141,fl Nl Wen 11 awian I Source Dour~ compaecdtre /116666~9 Hence LP ~to leper114~4 ~dim Maier S CAMS Mo'sob both corencland non. ~ex I ~wen Fos the 454~49 tormung.~44 Cy CIS *MK* es.Incises Xpu665 new O4~O ~a. CHS XECOWSUCOASCRIOMUUFX0EPARCSANST åPo SO For rho Sbevoge corneener not ~cif by 08 Pepe YAW rho foments SpermMgt, Sheinberg~sus ofMime. on4.. AlAEMtAk SCE1,O,O,FANCEPCLISCAWNIVAPAOASPEPVAROSCSMSEVGENS« TPUK TOW end IMPS L a5 EFTA01097745 13 January 2015 HY Corporate Credit Energy Newfield Exploration Relative Value Newfield's recently announced FY 15 capex (excluding capitalized costs and interest) is around $1.4 billion range or down —$500million YoY; this was below the $1.6 billion levels, which management noted as the likely level based on $80/bbl. The lower capex outlook is expected to bring meaningful reductions to its FY 15 cash bum; we estimate -$200 million of cash burn for FY 15E. This bodes well for its goal of neutral FCF in FY 16. The reduction is likely to be across the Uinta, Eagle Ford and Williston plays, while it would continue its focus on the core Anadarko where the company demonstrated solid operating momentum in FY 14. NFX has set an ambitious target of doubting production in Anadarko during FY 14 and achieving an exit rate of 50 Mboe/d by end of FY 14. Of note, NFX already reached that target exit rate in Q3 14 and expects to average 50 Mboeld during Q4 14. Well results in Anadarko - across the SCOOP, emerging STACK and newfound Springer Shale - have been solid; both SCOOP and STACK wells continue to outperform the type curve. Besides the Anadarko Basin, momentum in other plays continued to be solid allowing NFX to raise its FY 14 production growth guidance to +21% YoY (PF asset sales), above the previous 10-20% YoY target. We expect this operating momentum to continue in FY 15 and FY 16 and drive single-digit production growth (6-8%) despite lower capex. Besides operating momentum the other key factor in the medium term is NFX's hedging program; with 80% of FY 15 revenue hedged and 57% of Pie 16 revenue hedged NFX ranks 3rd highest in our peer group. However, the caveat to the solid hedge levels is the hedging structure; 80% of the oil hedges in FY 15E and 100% of oil hedges in FY 16E are three way collars limiting downside protection to $70/bbl only. Driven by the operating momentum and some hedge protection, we expect FY 15 and FY 16 EBITDA levels to be —$1.4- 1.5 billion. On leverage front, we expect the company to maintain current net leverage levels of -2.0x currently, which factors in $600 million proceeds from China asset sale. The timeline for the sale has been extended recently with price as an issue. We believe solid operational progress and a high likelihood of divestitures (China) will push this currently split-rated credit company (BBB- /Ba1 Senior Notes) to full IG within the next 12-24months. We maintain our BUY rating on all NFX bonds. On the margin, we believe the possible positive catalysts for NFX (operational, asset sales) make these bonds trading at —6% more attractive than SELL-rated QEP bonds trading in the same area (YTVV: 6.1-6.3%) given we might see negative catalysts from that credit. NFX Downside risks include higher-than-expected spending needs or lower-than- expected production growth. Page 92 Deutsche Bank Securities Inc. EFTA01097746 13 January 2015 HY Corporate Credit Energy 'Figure 78: Newfield Exploration Financial Summary SIM 0414. ISO% Sam 2.6•4144.44 Inv 41.*X01 144014 11a) MAIM Y. Mem ON 10.0 7,49M404•44.414W02 3044412 AI Mel* NS ISM0. MOM AMA OW% 044,4 NOM On DM 144.1. a1 MOMMO. Matti WIM) WW.13 Ilwww 401 011 x10 1411 x141 ]J10 44044114400.4 Om *Mal • O.Ow. 11 1 Moors. IA 143 IA 674 2203 2471 1147 Len "onryf a" 10; IA AI 9Y 104 ON 1.141 *A Pm1.4.4 mam4 Gm. 1.4411 17 Py 07/ 00 11/4 Ill 01 SI 11a x744174 74 damn.. apirAm IM IY f 4) .121 Yf 1411W 474147 Ma In 110 141 Px AI III M 743. 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AMEPULAItSCE70,4FAW,PELTSCPWAII7ANClOASPEPVAROSCSN,SEVGEA7SMTPLIKIEWend 'SPX EFTA01097750 13 January 2015 HY Corporate Credit Energy QEP Resources Relative value QEP Resources (QEP) divested its midstream business in October 2014 for $2.5 billion, and before it could make any major decisions on rewarding shareholders from the sale proceeds, oil prices cratered. Thanks to this fortuitous timing, QEP is starting off the current commodity cycle on strong financially footing - net leverage levels pro forma for the transaction are 0.6x (the lowest within the peer group along with XEC) and liquidity is an impressive $3.2 billion including $1.4 billion in cash (the company paid down -$900 million of revolver borrowings and unsecured term loan). While QEP scores over its BB-peers in terms of financial risk, the outlook for business risk is relatively less attractive. Specifically, QEP lacks high quality assets with significant scale (i.e. lower inventory life) comparable to peers like RRC and NFX; its Bakken acreage is only 109K net acres of which the top quality South Antelope acreage is just 27K net acres. The issue was only partially addressed by its minor Permian acquisition in late 2013 (263K net acres). Consequently, it is difficult to see any credit catalysts in the horizon for the company driving a meaningful improvement in credit profile from current levels. We acknowledge that, given its strong financial position, management could attempt to remedy the situation via another major acquisition of high quality assets and that, given the current condition of the asset markets, could even get it at an attractive valuation. But, at this stage, it is too early to factor this into the credit outlook. In terms of financial outlook, we see a modest deterioration from current levels over the next two years driven by weakening eamings and modest cash burn. We expect annual capex to be about $1.4 billion (versus $13 billion in FY 14E) driving production growth in the high single digits. However, EBITDA levels should be in the $1.2 billion range for both years, below $1.3 billion in FY 14E (pro forma for divestitures) due to weaker realization. In turn, we see cumulative FCF burn of $550 million during the next two years and net leverage moving up to 1.3x by FYE 16. The company's hedge program is fairly modest - 25% of FY 15E production and close to 0% for FY 16E - exposing it to downside in commodity prices. Taking all of the above into account, we are moving to a SELL from a HOLD on all QEP bonds (YTVV: 6.3.6.5% on longer-dated bonds). Overall, given their recent outperformance, BB high yield E&P bonds have significantly outperformed - QEP included. Further, given our shorter outlook for oil in 1H 15, we think we will see further weakness in overall E&P bonds before we see any marked improvement; we think this leaves BBs without catalysts as set to underperform, of which QEP is one. Upside risks include using cash on hand to pay down debt while downside risks include potential levering acquisitions. Deutsche Bank Securities Inc. Page 97 EFTA01097751 13 January 2015 HY Corporate Credit Energy IFigure 82: QEP Resources Financial Summary 444.40 1144 1444 PK Oa Ws 000441 NW 46 tt% al aNente. 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MAN 17 $7444 Oros°. ttenk 0136.44 04 OP 10 0) EFTA01097753 'Figure 84: Commodity Price Scenario Analysis: QEP Resources Forecast Metrics M FY 15E EDITDA (S FY 15E ref" Is 7,1F lic., 45166 3 WOOF'S Cii t >I I, I 3 5 $225 $2.75 5125 1371 $42$ $4.75 S1.75 $225 stet 121.20 53.76 14.20 $4.70 a -2 $304 5600 5742 5006 $057 $929 5891 51.034 MA 44831 ($413) t$592) $W 54151 ($441) 11394 a; 8 $10.0 560.0 $786 5891 5846 $953 $910 $17316 5972 $1.078 $1435 51.1.93 $1.097 51.202 ELI* $1,265 $400 MO 56071 ($1211 ($657) ($471) 10505) 15420) UM 5370 41051 153191 43557 ($229) 4300 ISM - $00.0 1997 51369 $1,121 $1.183 $1246 $1.338 $1,370 MA ($435) (SM) 153347 12.4 (82331 4183) 1132) $70.0 $1.102 $1.164 81.227 $1219 $1351 $1413 61.176 $70.0 ($3491 42911 (5246) $191 01471 175071 114611 WOO $1.206 $1.270 11332 4494 $145? $1319 $1361 $50.0 42631 52127 (1102) $112 ($611 (SIII $40 no. $1,313 $1,375 51438 $1500 $1382 $1.624 11.687 $503.0 ($1771 ($126) 076) 1126) 526 $76 $126 FY 16E ERITDA 'S FY 16E FCF (S I6111ion) r. ()IF 1.1 NYMEX Cx515 no> $1.75 $2.15 St75 $3.25 $3.75 $426 54.75 $1.75 5226 $275 $3.25 $3.75 $425 64.75 530.0 $151 $238 $322 $406 $489 $573 $657 530.0 41.196) 131.120I 151.041 159691 49921 (6916) 47401 $404 $362 $446 $523 $613 $697 $715 $864 5•90 41.014) (438) 5862) 5784 4710i 4634) 45581 $60.0 $570 $653 5737 $621 $305 5856 $1.072 5104 (10331 4 757) 11017 OM (16201 4 453) 4377) $60.0 $777 WI $945 $1028 $1.112 $1.196 $1.20) 560.0 05521 40767 IWO/ 18121 (173401 0.27/./ 4195) 0 $700 5685 $1,069 $1.152 $1236 $1320 $1.401 $1487 570.0 44701 43947 4.3107 11421 151661 ($901 $14) $194 $1.192 $1.276 $1.360 $1.444 $1527 $1,611 $1.695 5800 42111 5213) 1137) 065 $15 $91 $167 5900 51 40) $144 11.568 $1661 51 735 51.619 $1.033 500 ($1071 5311 $45 $121 $197 273 5349 FY 15E Nel Leverage FY ISE DebliProved Reserves (Stride) iirMIFX 095 IS more) NYNEX O** ISInele) 41.11 52.33 539 $325 14.71 14.25 SSTS si. 122$ 53.25 $1.7> $423 $4.m 1310 257 227 207 1.87 I.67, lax 127 1330 10.6 46 $06 $06 $0.6 $0.6 SOS $40.0 2.1x 134 1.77 1.67 1.44 121 Els 5400 10.6 506 506 306 106 $0.6 SOS $500 1.77 1.0* 347 137 124 137 1.07 5300 $0.6 50 6 $0 O6 $0 O6 56 5.6 $0.6 0 $600 $70.0 157 12x 1.37 ft 1.14 las 097 to, 5500 $0.6 50 6 $0 O6 $0 O6 106 50.6 $0.6 1.17 1.117 0.4. 047 01* 0.7* MA) $0.6 506 506 506 106 $0.6 SOS $80.0 viz 1-07 097 087 0.79 13.7x 01* VOA) 10.6 506 506 $06 50.6 $0.6 SOS $90.0 097 007 0.07 0.7o 020 067 06* 5930 Mt, £0!) 537 537 506 50.6 $0.6 E Ni-! Le._ Li FY 16E DedProved Reserves (S'Melt) Ne313.3 (.0.: Tr' wall. X Gas ISimolel $1.39 Sta 11.71 10.20 SITS 1.420 San $1.75 5225 am 8025 5.75 US 14.75 $30.0 1697 11.7* 63* 62o 44* 4.07 337 5300 0.7 $4 $0.7 O7 $0 $0 O6 $0.6 $0.6 10.5 $400 737 5.0x 4117 3.77 3.14 267 227 540.0 110.7 $0.6 506 $0 O6 $0.5 $0.5 10.5 560.0 421 3.47 297 227 2.1x 1.8x 117 550.0 $0.6 50.6 505 505 50.5 $0.5 $0.5 sap 2.71 23* 2.117 124 1.4x 127 1.17 MO 50.5 50.5 905 505 50.5 $0.5 50.5 O $700 117 1.67 1.47 1.21 las 097 0.77 5700 501 105 SOS $0 O5 $0.5 $0.5 10.5 580.0 137 1.1x 307 060 024 067 0117 580.0 501 105 505 $0 O5 $0.5 $0.5 10.5 $800 0.96 Cits 0.7a 014 0.5x 0.4x 0.2x 590.0 50.5 50.5 905 305 50.5 $0.5 50.5 Stamm 0.7776.51463 Deutsche Bank Securities Inc. EFTA01097754 Deutsche Bank Securities Inc. 'Figure 85: QEP Resources Benchmarks Reelkaibm1/111•0 313 fogiCISA(0340 hoboOaf:ma 030 0 154 153 0 1251 120 I 30% 24% $543 0 145 $44211 26% 20% $42 1 0101 .15 5 5152116 40 1 51 270 5364— "3114 20% 140 0 'Is' 16% 1730 0 10% 1101 20 0 6% 1751 PO0 0% I .5% W0 Th e 2013 201E 201 2013 1014E 2015E 2011 701: 2013 20 , t 2015E 4001 sonde. BB 4011. WE' alstOn93 elsecb. 4011. secoaqe -v.:So* I 0.4•411.% aryl. a One Cab tilt/ Cob,. ilea11103. rya. cis.' on 1174 1920 1400 1340 1342 $51 542 3 544 123 3 $248 1350 131 545 114 ri 0 113 1200 127 535 020 3—0 12109 1235%1 1 1 146 8 '010 1.3 0 issis.2° $260 1261 124 7 $273 126 1120 18 110 0 17 1150 1200 115 115 010 100 t5 160 5150 1100 44 0 51 150 120 550 11 100 2013 201E 2015E 50 0 2013 3714E 28015E SI 0 2013 2014E 2015E 2011 2011 2013 • 00 •41404.10 -.15. DOIP Meta ID Wads KIP 00S Sono 'OP eNsta ID .Mme. 44n4 bray Debt(OSTIA' 11016 57%2% 00x 35x 32% 64 %•4810% 3 Ca 7)3x 301 2 7x 50/6 00x 25. 2 40% 3 613. 20x 30/6 40x 30x I 5x 30% 20x 10 091 0 00x 003 2011 2012 2013 2111 2012 2013 2013 3914E 2015E IMP OWOSSO etionia .OEP sawn BB 40•1431 DOI, dilfits, OP &Fagot Douala* Be.* [ovum,ofa, Moats FAmte LP For DUib“)~9 cooPawd* ismndia, OS Ng.3EN(me Akeeasts I:gun...taw our putt. g oranosta CH( XECOMVSTXCOMUCRP,MCIO,COEP,ARC SANS!ma SO Fora.M)nvev cornpant3 nM cowl% be 08 1,330 Y IN /oakum' Owes Mita Bbornbeipomanus animas 0,04.. AlAEPEnAlt8CTICXQFAACEPELTSCNAMMAIMOILSPEPVAROSCSN,SEVOMCSMIPLAULMind WFX EFTA01097755 13 January 2015 HY Corporate Credit Energy Range Resources Relative Value RRC has announced FY 15 capex budget of $1.3 billion; $220 million lower than FY14E levels given further capital efficiencies, the company maintained its production growth guidance of 20-25% YoY. The FY 15 capex plan is expected to drive cash bum in the range of $275 million while for FY 16 considering flat capex levels YoY, we estimate RRC will fall slightly short of its goal of positive FCF, although still pretty close with cash burn of about $110 million. RRC's strong production growth outlook implies solid EBITDA improvements despite modest hedging levels (47% of FY15E and 6% of FY 16E revenues). We estimate FY 16 EBITDA of $1.3 billion, +10% from FY14E levels maintain leverage at the current 2.7x level. Looking at operations, the focus will continue to be on its flagship, low-cost Marcellus assets where the company is spending 92% of FY15E capex and continues to focus on drilling longer laterals and increasing frac stages driving both efficiencies and better returns. We see RRC's Marcellus acreage as one of the top-rated assets within our peer group; for instance in the core southwest Marcellus dry gas acreage a 5.2K foot laterals well delivers 85% IRR @$4/Mmcfe, which should get even better with the company targeting to drill 6.2K foot laterals during FY15. Driven by strong operating momentum in the play RRC continues to expect to grow its Marcellus production to 3 Bcfe/d (net) with the key positive being its ability to take the production out of Appalachian basin to improve realizations. On gas transportation, RRC has noted that its takeaway capacity would more than double from its FY14E levels of 1.1 Bcfe/d to 2.4 Bcfe/d by end of FY 18. On the midstream projects; two of the three ethane projects are already online i.e. Mariner West (15 Mbblld gross) and ATEX (20 Mbbl/d gross). RRC expects the third project - Mariner East to begin carrying ethane in 2I-I 15, while the transfer of propane using Mariner East is expected to start this month. Once all three ethane projects are online RRC expects a 25% uplift to its realizations. In addition, propane transfers should benefit the company via higher international prices and lower transportation expenses. We maintain our BUY rating across the structure. Longer-dated RRC bonds yield 5% (or in line with the BB index). Aside from the "energy" taint, these bonds would be trading 50-75 bps inside the relative index. We still believe the credit is going to IG, especially given it will come close to reaching its goal of positive FCF in FY 16 and beyond - an impressive feat given (i) production growth of 20-25% YoY and (ii) a commodity bear market during the same stretch. Downside risks include any midstream project delays and widening Northeast differentials. Page 102 Deutsche Bank Securities Inc. EFTA01097756 13 January 2015 HY Corporate Credit Energy 'Figure 86: Range Resources Financial Summary 424 10041 nn_ MOW NC Ma 4 2424. 444 54.0 7.424 0.44 342 Waft. 1111411 1.24324 1040 15 40312 6 25% 534445.0 40444541421 444.2 4144402142 49500 t ./.21 1 ht.II 10223 S ON. Saw Lb Wee 0369 4143 213100 'Steen 2,4442.77 15400 1026 6 025 24.23.444.4 4.40214 Ar i220.90. 11100 If 1.0 14110 II 000) I 04 • , Col • Iltam .104 a 473 441 0111 SA 1.11: 650 1444444441120040140 • Gun 12241204 17 2 6 63 214 461030inae 443 32 474 446 1/144 107 H4 1.716 04•4410:40 146 122 124 M 41 717 tt) ST la 244040140442300 0441 17 32 II 1311 EMDA.422.4444 •• T IN IAN cat 130 IX Ill 423 10 MI 341 445 40 ▪ 041 144 144 lie 433 III 544 424 34 50 •601 44 45 45 45 3* OS Oa IP 177 COT 16144•40 It, im III SI KO 414 30 255 3411 O00 St 91 67 OM 0541 424.1 835 IP in O 0105.1. II 4 10 24 II 44 22 127 50 4033066 31 01 61 24) 214 641 a 26 1W 7.04. 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'Figure 88: Commodity Price Scenario Analysis: Range Resources Forecast Metrics _( o_ c FY 15E ERITOA IS Million) f I SE icr IS lir Ire', R 2 LI Nr1IFY. I. I B ri < $1.71 62.25 1275 S3,25 33,73 1425 64.75 31.70 3225 SUS 17320 13.76 64.20 64.75 $30.0 1630 3713 3767 WI $936 31.019 $1.110 353.0 07141 (36061 ORR $510 (4421 193661 13264) No $400 $715 $79) 13164 3938 51 012 51088 51.096 61.116 non .26661 0370 135107 4441) 344 4373741 (12941 0216) 0 — in $50.0 3792 3866 $910 $1.014 31.172 $1.263 650.0 ($6771 (15091 $374 (13061 ($229) 1$147) 0 SOO 3868 5942 51.016 $1.091 51 165 MOO 51.339 $60.0 (45091 (ONO it373) MG 02371 ($151) ISM $750 3144 31.019 61.003 $1.167 31 241 51.325 51.415 3704 iV1411 03731 ISM) $23 01691 ($934 alit $.0.0 31.021 31.096 51.169 31.243 31317 51.401 51.492 $50.0 dam two.) Ma/ NI (SION ($141 1.33 180.0 31.097 11.171 $1848 11.320 31394 31.473 51.538 $90.0 13041 0236) 4168) 3100 (3321 344 6126 FY 16E EEITOA (S. Million) FY 16E FCE i5 Millie 1 toiVILY. &vs 5 m:Iel 61.3E 32.23 $2 TS 3.25 53.73 34.20 $4.711 61.7$ 622$ $2.71 5125 $3.71 $4.21$ $4.75 $30.0 5132 5303 VA) 3444 1814 3305 61.166 fa ($1.103) (51.004) 047) ISOP 1 (*SO 15377) 1319) 340.0 1212 3433 $4.30 3774 $945 31.115 11.216 40.0 ($1.039) Rea) (1726) ISS6SI ($4131 (3253) 19971 350.0 3382 SSW 6734 1904 11.075 31.245 $1416 $50.0 (19171 (67031 13330 134471 12911 ($1229 $25 1000 3622 6693 $884 31034 31205 31.375 $1.546 0 $500 117951 ($639) 11440 113261 MS% ($121 1147 $700 9563 $523 WM 61.164 31335 31.106 61.676 3/04 06731 COM OM mix (347I $110 $269 ISM 3783 $553 11.124 $ins 314165 31.636 ELKS $304 (16511 C$395) (1239) 302) $74 $232 $310 1960 1913 V 034 61254 $1425 31595 31.706 $I.937 $63.0 MOM 02731 3117) 340 $196 1.354 S512 FY I SE Net Leverage FY 15E Debt Proved Neserves (S lade) tlYklEX GOO 15 rticle.) NYNEX Gas iSralei 31.75 $223 5275 0.25 137$ 4.25 34.73 31n $223 32 73 0.25 $371 $4 24 SO 73 3204 $0* . ..O. 1.7. 4.2. 301 344 31x $330 Y)5 $7 t. 505 SO4 9)4 $0 4 $01 340.0 52x 47x 424 ISA 3.44 314 264 5430 $0 5 30 5 $ 514 9)4 $0 4 301 350.0 4.74 4.24 3.84 3.44 3.1x 28x 2.434 5500 $0 O5 $04 O1 SO 4 304 50.4 304 $804 422 384 3.44 3.1m 2.44 2.6x 2.44 1050 SO $04 SO 1 SO 4 304 50.4 304 3170.0 354 344 3,14 2.0. 218 244 2.24 1700 $0 4 301 $01 SO 4 9)4 $0 4 301 680.0 3.44 314 2.94 1.114 1.42 22% 204 5050 $0 4 301 $01 $O 4 9)4 $0 4 301 39.0 314 29. 2.6. 2.4. 2.1, 214 1.9% 3350 SO .‘ 504 504 104 SO< 304 FY 16E Net Leverage FY 16E Deb1Proved Reserves (S'Mclel NY1M E 05, (i'n5cle) NYLIE Co (S mclo) $1.75 3225 =75 33.25 14.75 WS 34.75 $1.75 $225 1275 13.25 $3.75 $4.13 $4.75 MA 423X 17.0. 9.94 6.8. 4.54 3.834 3.1x MO 10.6 $06 105 $05 $0.5 $2.5 $04 t POO 1984 11.0x 7.14 62. 4.14 321 2.64 $404 60.6 10.6 10 5 $0 5 935 $0.4 10.4 350.0 1234 7.04 6.6. 4,3. Ms 274 2.2x $50.0 $0.6 $0.5 10 5 $0 5 9/4 SOS $0.4 0 $10.0 964 Six (Si 3.54 204 2.314 la $60.0 SO 5 10.5 sas 105 514 $0.4 $04 VOA 544 Allx 174 3.114 244 1.0x ..is $700 30.5 $05 105 $04 WA 10.4 $0.3 $A 5.14 ak 3.1* 2.5. 1.1. 1.75 1.44 MO $0 5 $05 $0 4 $0 4 $0.4 10.4 $03 ISM 4.14 334 tat 1.24 la 1.6s la $90.0 $0 5 $04 $0 4 $0 4 504 $0.3 $03 Stamm Etoidao. Sorg EFTA01097759 'Figure 89: Range Resources Benchmarks 30% 2 20% 10% 20% Indecale Cia 215% 14% 73% Hedge% 72% TO% POO S00030 17 0 SG 0 $5 0 14 0 $3 0 t2 0 501 51r ftellkatlaeallc10 Sf 199 10 $7.0 $6 1 tat 111 $21 SI 5 SI 42.1 11/469 106A PIA, 13 128 12 4 $2 $34 SI 0 WS 0% 50 0 2013 2014E 2015E 2012 2014E 2016E 2011 2017 7013 2013 2014E 2013E 'WC essmIll/ CIAMPI ORO 0/041.413 d4 •7$9 909,0193 ones, SSC • va3te, 00 '11106311 006/91sellers%/ 14619 C0•800 900101/ 119% 125 120 re 0 $30 119 $60 $38 152 120 557, $4 1110 12 150 $50 420 $40 14 0 5 $30 030 II 0 120 120 $05 II 0 SID No $00 SOO 2013 201E 2015E 2013 2014E 2015E OK Swale nista •9•9 manna am- 6016 92% I 4x St 10x 26x 30x 1 Ca 49100% 30x 22, 27 50% I 2x 40% 106 25x 08x 211x 30% 013x Sx 10% 04x lax 10% 02x 051 0% 00x 001 I 2011 2012 2011 2013 2013 1014E 2015E awe *Wolof. fl ail>. COMM sac OMrMW 011•0•1 Source Ilousces So* mecum,dee amnw.9 Moto.LP lewlescro level ArciliortMedire need Merton S Wake Ma.* bah coveredredno. mwm coreposer Deutsche Bank Securities Inc. For the Sewage corrounits mewed te 08 legb Ka( No &nowo Sows seta ou pulgelor urinous. CHI( XEC.DIteSSUCCOMALCRP,HICIA9COEFORRC.SA?VW' onarS0 For the 610314volge corrounits not cowerI by 08 Mee YAM ere fOnIOUtI139w113 meta @bomberg wiener terntraeu et. AMEPERASSMOCQSAIRSEPSLTSCAWAYtlePAOAS,PEPVAROSESN.SEVGENSMIPIA(12W000 lOPX EFTA01097760 13 January 2015 HY Corporate Credit Energy Samson Resources Relative Value Samson had a vulnerable credit profile even before the current weakness in the commodities market given its high leverage levels and the modest quality of its asset base. Nevertheless, we had a constructive view on the company for two reasons, the company had a good proved asset (or PV-10) coverage (relative to its yield levels) and we expected an equity infusion by the sponsors as part of the restructuring of its business. With the sharp downward shift in the commodity market, the first contention is not valid given the substantial erosion in PV-10 value. As regards the second, the sharp depletion in the value of its net assets largely rules out the possibility of an equity infusion. The $2.25 billion Senior Notes '20 currently trade in the 30s, which implies the equity value of the business is negative —$1.5 billion. Given this it does not make economic sense for the sponsors to invest equity into the business. Therefore, the credit is now basically driven by the outlook for fundamentals, which is clearly precarious. Leverage levels are already at 5.5x and this is set to worsen further over the next two years to 9.4x on earnings weakness. We see EBITDA deteriorating meaningfully from FY 14E levels of $622 million to $496 million in FY 16E - based on flat production levels and weaker realization. The lower EBITDA levels are not sufficient to meet its maintenance levels capex (excluding capitalized interest) of $630-$700 million. Moreover, the company also has a high annual interest burden of -$290 million. Overall, we are seeing a FCF bum of close to $950 million over the next two years - i.e. a business which cannot even sustain maintenance level capex. Also worrying, current liquidity is just $434 million - the company will run out of cash by 1I-I 16 unless there is an expansion in the borrowing base (we are assuming a $500 million addition to its credit facilities in 2016, likely from a second lien loan). Further aggravating the weak outlook, Samson, which has generally been a conservative hedger and protector of cash flow, has fairly modest hedges for Pie 15 (40%) and FY 16 (25%) driving further downside risk to our estimates; for example, at $60/$3, net leverage could be close to 12x levels by FYE 16 and cumulative FCF bum through FY 16 would be $1 billion. Even in our base case, we see the company breaching, by a wide margin, the net leverage covenant limit of 4.5x in Q1 16 (the covenant has been relaxed through FYE 15). Overall, many of the positive ideas we discussed in our 2014 initiation of the credit are being tumed on their head given the commodity backdrop especially the deteriorating PV-10 and equity infusion in addition to the difficulty of selling assets in this market. Our initial call was very catalyst driven - positive ones. Further, given that a structure has already been set up to layer in additional second lien debt ($500 million), we see future layering as highly probable outcome. So, white SAIVST 935% Notes '20 bonds are trading in the 36/38 context, we do see further downside. We therefore move to a SELL from a BUY rating on those notes. Upside risks include an equity infusion from the sponsor, assets divestitures and/or distressed debt exchanges. Deutsche Bank Securities Inc. Page 107 EFTA01097761 13 January 2015 HY Corporate Credit Energy 'Figure 90: Samson Resources Financial Summary waft TIVI•Sincria•Oxiitt Cal OM 4) 4•000 151.440 WW Net /4404- 144144C04 4404114•4400.44 4.444 0 PP .4104444 n IM 111 In 21$ in 404 40414 43 245 72 114 .42 at a It 440 1.44 111 0 11 • am • 7, t, 41 OW) OW) (II • le am $ ice LIP COMPS WO 14•414 ai 7(0 (44 Si T. 113 ILIN C1171144taMip04 442 711 114 71 all 14i 740 COI 444044.11000 70) Ng Pi) 404 la /14 114 10171111141 1. 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EFTA01097762 'Figure 91: Samson Resources Financial Forecast I m rams 1199431.3273 Ian7690 Cain %prompt, 1074.079 141. 271 317 274 24 177 210 177 217 221 224 0/ 1147 114 Ies 14101 1711 Las 011 1444 es 443 04 Cana III Ilt 114 103 103 103 103 104 344 CC Ma 441 413 III 1144e43.0304040•600 020.2.401443046 IM IM 04 IN III 114 11$ IP Ml 174 It) a Mt 49 WA III 133 120 19 124 124 134 134 01 021 LP 40 441 04 Off 0 II 9 42 (II) (II) 10 PI 342 02 144 la PI) 9 110011 m 21 14 a a a a 26 34 P III to 037 004 an1 ft It 21 44 20 3* el KO a la 4 'al? 00, 0 31 Son a al 711 III a Ca . 091•001001 I 211 r0 117110/0001 o.lp F 194 01 all OM a a PD IMO 03:01 0111 II I) .66 1171 71774 dl Ttg gi% 2 POI 1011 g 03331 012 dM 4 1.111/ WOO 0410109 742 04 014 W OT PI 310 41 120 'PM TI MI 41 .114 017040114.0400 Aran DT 714 171. 011 Oa 40 177 70 TI 04 79 141 30 116 Cearaanfra IT III IT IM IT 19 IT IT 01/00060100•40/11241•00.0 *ans . 772 III (44 (37 40 346 311 ADA 771 736 (44 313 341 0 11.0 1170041770 Wal. 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A•N. 044 ,1 UU22UUU 222222U2 :camas a adoviu6 ;O222222 iiiiRii iiiiiii aOqi) I 0 ILIA aOqi) I 0 ILIA sis: Samson Resources Forecast Metrics CV:0;;At* gns*nsrAn R-A4g--x g2laaaS t22assa» 1611l$14::; Figure 92: Commodity Price Scenario An 16222 7,- nrAt;:A8P., dus2 aa 2 al ERRS Page 110 Deutsche Bank Securities Inc. Deutsche Bank Securities Inc. 'Figure 93: Samson Resources Benchmarks 1•4414e Gana rt./Amnia eurro 60% 42% 14 0 133 p.m " 4 $3 5 522 40% 1:3 26 30% 261k4s6 1914 125 124 20% /20 10% 0'41 $15 0% Si 0 -10% 105 -20% 47% SOO 2013 201E 2015e 2013 201E nose oftwat mat. amain 2011 2012 2013 •14rIV ermine •SVeir stlectine star Opura444 %erg% VOW, fah Cal 1/11.14 001410141/Ne% 136 $50 145 $4 1 fit 0 St 0 13%29 145 155 $11 14 0 130 12S25 520 140 10 0 170 125 13 5 150 120 120 $50 150 Si $25 $40 $4 0 110 12 0 $30 13 0 It 5 $20 $05 110 12 0 10 0 Si 0 t0 $0 6 110 110 5) 90 100 2013 201E 2013 3714E 3015E 2013 201E 2015E SNOT Wawa@ .awl aeon. tomma _n *Nadine Wow Oasselblmly 0410 anon 170% 105% 76x 11. lex )00% 201 lot 79% 90% 6 lx 15x 60% 40% 10r lot 3 04 20% 0 264 10x 0% 004 504 2011 2012 2013 2111 2012 2013 2312 2014E 3015E attieBT OISE, altola• stalveT candi, seats 6544444 Sara Ow/ate Stook tom:on/dm& &bombsguAlunce LP Mdustey ten) Mcdieet Modem BRAMMoan S Mtth Ina.* both convoc Avnlncv. aawada4pton Fos the Avaanvo compass. 444$4441by 08 HO Mt( me lincases 4gowis,4144a owpWaiodasrinwvs 041( XEC,CMFSCX021111CRP,H4hr4GEPARCSAMTarbISO Fos No 1434nvage tornymng.mt cosiEdby D8 KO YAM rho Icitimuts Ownnew Etbonbarg comouus amithints app: AGIEPERARIICEIXO,FANCEP{LTSCMMIAMPAOSIMPVARDSCSN.SEV001 spenenWand WPX EFTA01097765 13 January 2015 HY Corporate Credit Energy Sandridge Energy Relative Value As a single-asset company with modest economics, SandRidge (SD) is relatively more vulnerable to the new, significantly weaker commodity price landscape. Notwithstanding the high-grading and the substantial operational improvements across its Mississippian acreage over the past two years, the company is likely to struggle to build a sustainable business over the long term given the weak outlook for oil prices. DB equity research sees the Mississippian Lime achieving a 10% IRR at $80/bbl oil, one of the most challenged plays in the US. The structural funding gap problem - the intensity of which had been steadily receding in recent quarters due to solid operational performance - is now front and center. Despite a sharp ramp down in its capital program - we expect annual capex to average $1 billion over the next two years (versus $1.6 billion in FY 14E) - we see the company burning $1.2 billion of cash through FY 16, exhausting most of its current liquidity of $1.3 billion. More worryingly, we see outlook for continued cash burn indefinitely beyond FY 16 even in a maintenance capex mode. We see annual run-rate EBITDA of -$710 million at $65 oil/$3.75 gas. Given annual interest obligation of close to $300 million, the company will clearly be unable to meet maintenance capex of, say, $500-700 million and remain FCF neutral This situation would be further aggravated in a downside scenario of $60 oil/$3.5 gas with EBITDA dropping to $560 million. In short, the Mississippian acreage is not well suited for a low commodity price environment, especially as a core play for a company as financially leveraged like SD. Further, the option of augmenting its liquidity via asset divestitures, which appeared to be a viable one just a few months back, is now all but gone. Its midstream infrastructure in the Mississippian play, which might have fetched a valuation of up to $1 billion earlier will now be worth much less, and on a partial monetization, could receive maybe $200-$250 million. This overlooks the difficulty in even attracting buyers given questions over long term sustainability of play economics. The value of its stake in upstream trust subsidiaries has also taken a severe beating in recent months and is now worth a little over $100 million. While we acknowledge that the recent resolution to the financial filings is a positive, the viability of the Mississippian play is still a major concern for the market as evidenced by the trading levels of other HY issuers with core positions in that play. Midstates Petroleum (MPO, not covered) is a relatively smaller Mississippian comp with a fraction of the liquidity of SD and about 1.5x turns more leverage (6.5x in 2016 Bloomberg consensus) - it trades at about 2x the spread of SD (STW: -2500 bps area). That said, looking at SandRidge, we don't see any visible catalysts on the horizon. Technically speaking, the credit is up roughly 10 points from its mid-December lows (bonds now in the 66-67 area, YTVV: 15.18%) leaving us to believe that upside/downside is skewed to the downside as we enter the seasonally weak 1H. Further, we think current trading levels already have an expectation of lower announced 2015 capex levels built in. With that said, we are moving to a SELL from a HOLD rating on the name as we believe one could see more attractive entry points in the name going forward. Upside includes better well cost reductions and higher type curves and lower than expected FCF burn. Page 112 Deutsche Bank Securities Inc. EFTA01097766 13 January 2015 HY Corporate Credit Energy 'Figure 94: Sandridge Energy Financial Summary lea Sea, lite Wes lanialandola IN adilailla Sawa I.S•ilt Van EIS laapinall Kt Pan sal Par ina inn rafailaball • a ana nal MM:CMC:i.n:12MnnEn — 301 'PA *Pan a •Il v. • ,/. SIP La. IPE Sala El 11.4 E. nt IQ SO 40 NI IP Vra etrole, ma. 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E0ITDA (S FY 15E FCF (1, Mallon) NYMEX Gas (S. mcf el O d SITS $2.25 $173 $320 WS 5425 San $1.75 $21$ 1275 83125 53.76 1425 75 a -Z $10.0 5362 5384 $416 1/411 1460 $512 1645 $300 . $885. r56571 15629) MO 07721 ($743) 5714/ espa aC $80.0 3435 $487 $EA $531 3583 $585 MD S40.0 155201 ($791) 1$732) 714 (37061 (51 77) 1$643) 173 $50.0 3418 1650 $562 $614 1648 $678 1710 550-0 117511 ($725) 11597) 6866 (36401 (UM 12481) 449.0 SEW 1.633 5666 3697 $729 $761 $793 0 $400 (MR ($519) 13531) 6802 415 741 (5545) 11516) $700 $444 $716 $7441 $771 M I $144 $4 76 $700 /51/221 (11353) Me $135 55081 (See 11450) $80.0 5150 $762 $814 3416 $878 $910 $943 5 583.0 (16891 (16•3) 55123 $483 04551 ($426) 1$397) 590.0 3787 $819 $851 3.533 $315 $947 $880 4910 ($5431 ($512) /IMO) Sea 434281 ($397/ (5341) FY 16E EBITIDA (5 Mahon) FY 16E FCF (S Mullion) NYLIEX Gas te =le) NYME X Gas terricie) $1.71 $225 $2 A25 93.75 $4.23 $475 $1 75 $225 $2 75 $3.25 53.73 $4 25 $4 75 $30.0 $40.0 580 5122 £2!, 5165 V) 1207 5113 $250 £1J5 5292 aniS 5335 s 193.0 22l) 140.0 ($1.086) t$1.171/ (51.11/4) 151.1371 151.0021 n18.951 15980 $1 032/ (39191 $1.0.21 11477) neon> in n) $500 5216 5259 $331 $311 $387 5429 1472 w $500 (1.9511 (1509) 15826 ($784) ($742) (PM $600 $353 $0$ £4p3 SW $523 SUB $GSS 5 $400 (ale c$774) 113$3) 1149 ($6491 (18071 15565) 5745 (5514/ 11431) In 3490 $.533 $57S $B15 ZVI £703 170.0 5/511 ISM t16987 1$525 ($472) $80.0 5627 “70 $712 5795 9797 5840 5882 $80.0 (14471 ($50R 114133 I$421 (1379, ($338) ($296) seao 3760 5803 584S SM MD 5973 $1 OIS $900 54161 .1374, ($3323 16290 152481 .4207. '11651 FY 15E Net Leverage FY 15E Debt, Proved Reserves Waste) NYNEX 0/19 (5.34313) (Male) 51.75 S2 2$ $173 $3.25 $3.75 $4.75 $1.75 $275 23 .7 pia $1.75 $30.0 10.74 984 8.94 82. 71,‘ 6.6. $90.0 51.7 517 $1.7 $1 6 51.6 51.6 514 $40.0 86x 734 7.34 6.8. 644 6.0x S.64 $50.0 51.7 115 51.6 $1.6 51.11 MS 1.1.6 $ec, 16x 66* 6,2x 48. 5 34 52x 4 ex $5/30 5131 $1.6 $1.6 Ste $1.1 514 $14 Za= $60.0 116x Sex 6.1. 40. 444 4 54 43x $400 5131 51.6 $1.6 $1.6 $1.5 51.5 SI 4 $70.0 S.14 4.4 4.66 4.44 424 4.04 3.8x MO US 11.6 $15 51.5 S1.5 SIS SIS MO 4.64 4.44 4.26 4.04 3.32, 166 3.5x $10.0 51.5 SIS 31.5 MS 51.5 SIS SIS 5.3.0 4.44 4 24 4.0., 3.84 36* 334 33x $90.0 51.5 S15 f15 11 6 51.5 51.6 SIS F' E Nu! Len HI FY 16E Debt Proved Fl, se .ves .t."ÉMLA N MLX Gas ISMICIel 51.73 122S $2.73 83125 517$ 5425 S4.75 51.75 2 12.75 83125 $3.75 $421 34.71 530.0 .721x .2793x 146.14 2604 353x 256x zoo. $30.0 52.2 $21 $21 52.1 E2.0 920 MO 51.4x 312. 24.44 195 158x 1144 11.64 840.0 52.1 621 $21 120 $2.0 52.0 $1.9 $50.0 185* 15.34 13.94 11.34 1004 59x 8. Ox $50.0 52.0 52A 52-0 SI 9 S1.9 51.9 SIS $80.0 11.16 9.11x 8,7. 7.94 72< 664 61x SA 52.0 51.9 S1.9 1e $3 31.6 Ell SI/ $700 75x 7.1x 66x 6.04 544 52x 46x STU 51.9 MS $1.8 Ste 31.6 51.7 517 14410 606 55. 42x 4.114 4.54 4.21 4 Ox 555.0 51.11 51.5 51.7 51.7 S1.7 51.7 f15 590.0 496 42. 4.34 4.114 322 164 144 590.0 SI.7 51.7 51.7 51.6 S1.8 51.8 51.6 same Doeseto Sent [weeny ea EFTA01097769 Figure 97: Sandridge Energy Benchmarks to 0) Hedges I I hog MA Neill holocia Gana 30% 47.1 74‘VO% 1251 1 1301155 ii5: 71 42°1 I 40% $201 30% 45410%5% 032 316411 Is till 20% 10% $101 0% tS I .10% 1.1 .20% 101 -11% 2013 301.E 3015E 2011 2012 2013 2013 zu14₹ 2111E •80 Nadine memo 4:70 ~re °MOM DSO asaa4611 monk Ovms114011s.olat, 044 Ce460.14•401.1.044 !Merest...n401ln 1200 1 1n%1130 24 II " $450 $30 1 VW 6 1610 $400 S34 48 $31)•34 Pe 0 PIPI4 161 0 1360 1200 $140 1300 124 X24 7 $410 $120 $250 1100 10.7 Sal 0 110 $200 160 !ISO sate $40 $100 1100 120 $50 'to 10 0 2013 201E 2115E SOO 2013 2019E 201St owelme •MoMo .ID •./Mat4 Mk/44M. Daher WWI 7016 00. 004 913x 301 00x BO% 601 5 Ix 7 Ot 70x 0016 $0. 10. 150x 40. 10% 11x 50. 613x 40x 30% 90. 404 30x 30% 30. 30x 211 30. 20x 1056 I Ox 104 lox 0% 00. 00 00x I 2011 2012 2013 2013 3019E 2015E 2111 2012 2013 2073 2119E 3016E HD 606404 404.14. 4110 •11,04.11 ems .10 aM.me aNmsen seo Soave* OuuacHo 1744,4„ Cantu", dot /:ammo Fame* LP Mama. levolli4a1444044dien 88.44414144444 H 4,044:41induob both cowrodeandnon. moot comptess* For theNokrowvlp COrnp.vaa mmted by D8 HO Vinbt No &was 4pums alai ourpuzumodastimarts CHI( XECOlift4,4:X021/14CRAIMIt4740EPARCSAIVST anarS0 For the A101sv4p cony:wit not [onto.°by08 449n *on Us browns OWNS neat Abootep consatas oawudsPAY AMEPEF(ARBODICYCVAKEPCLISCIMIAMIMPQW4PCPVAROSESI4SEVOEA(SUTPLI4111W44.1IWXa Deutsche Bank Securities Inc. EFTA01097770 13 January 2015 HY Corporate Credit Energy Financial Summaries and Sensitivies for Non-Covered E&Ps The companies that follow are non-covered by Deutsche Bank High Yield. Presented are historical financials only, as well as sensitivity analyses based on Bloomberg consensus estimates. None of the below figures represent Deutsche Bank estimates or opinions. American Energy Permian (AEPB) Antero Resources (AR) Bonanza Creek (BCEI) Concho Resources (CXO) Diamond Back Energy (FANG) EP Energy (EPE) Magnum Hunter Resources (MHR) Midstates Petroleum (MPO) Oasis Petroleum (OAS) Parsley Energy (PE) Penn Virginia (PVA) Rosetta Resources (ROSE) SM Energy (SM) Sanchez Energy (SN) Tullow Oil (TLW) Triangle Petroleum (TLW) WPX Energy (WPX) Deutsche Bank Securities Inc. Page 117 EFTA01097771 13 January 2015 Hy Corporate Credit Energy 'Figure 98: American Energy Permian Basin Financial Summary NC OM* C Poo. 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Fincenell OS Oil 4270% 7.121%Sana Kno 0.0210 010 90 7 373%Sana Kno 0.0201 00o 400 Palma Ban • Malan, 3320 *Vat tn. as'In) 240 IMO 001OW 1177 I.697 40490110.4,40/041100011 1140,4% Canahla On Na• cla NI22 STI IM/Hake 0•41 4737 2.212 NC 004 )736 2162 Mnerdly Yana! 011wa 0111E W4 14.45 .4 /12 taaN0entssan 1.109 2413E 40 110 .442 Inlaprim Vela 211 1.261 EV94 691194.11 12.1 OtanDat FY1SEMIDAX 674 674 WS CmI Onfl4:10,.FY15 6010101 613 Sex ne Nat FYISEINIDAX 111, Sex VI) <X /3 04 12 nett donna 0 rquviawelenrani a aVveawr .25, ;sinew I Marta. fl 0...u..2.•Arawa”.....Mate in a: AM/ OYU - IS ..edpratalxvi dint 4R-item'beam Cf a.703 67 Monty a/ 45.53 l.114anaw ri•On ieaurid.r. £I.etWil ...%",w1t. 7310 Oar el , 3.1.10411paalan1 Atdatpmaf.wanva 41 OW/ 3: 2014 .4511 •,...4.1n1for Aff 1, PR Gala Ana) 201. M14 PrOft, n1t,r. gaia$:.ce IOI Ges13N'O1110fC yhx,x,isoy4 /5/11004.2Y243 aro", :Oen as cratt 31. 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EFTA01097772 'Figure 99: Commodity Price Scenario Analysis: American Energy Permian Sensitivity Based on Bloomberg Consensus I $1.75 $100 $225 $120 FY 15E ERITDA ;$ 2375 3180 $3.25 $159 $3.75 $179 WS s199 24.75 $219 $1.75 ($9931 $225 ($641) FY 15E icr is IOr lion 1275 (5822) 13.25 3603 13.75 ($5341 $425 ($565) S4.75 4567) SIM $10.0 $40.0 $156 1176 $195 $215 $235 $255 $274 $400 0041 06065 11567) asi ($5291 ($510) 12491) $5.10 $212 $231 $251 $271 $291 $310 $330 $50.0 (16491 (6633) 11518) 1490 (4741 ($455) 1$436) $603 5267 5287 $337 5327 5346 5366 $386 $60.0 (649.1 (1.475) 1$456) ($438 (4191 ($400) 15381) $700 5323 $343 $363 $382 5402 1422 $441 $760 (4391 (tA20) MAN) 11382 03641 ($345) 15320 $100 $379 WS HIS 2,430 $450 $477 $497 $800 (63ei ease .$346) 1132 ($1081 ($209) (1271) $800 $435 $454 $474 2494 $513 2333 $553 $90.0 ($32SI 4310 i$291) 11272 (52631 (62341 11215) FY 16E EBITDA (S FY 16E Fel IS MLA Gas roiclOi Ga. i5m.lci $1.71 $271 3775 53.25 $3.71 *423 $4.7$ $1.76 122$ $273 9325 53.7$ $420 $4.76 230.0 $20 $0. SW $45 $52 $50 $64 $30.0 08411 (1834) eve ISOM (95141 (5007) 1114:0) $40.0 198 $104 Si 10 3116 $122 $128 $134 $80.0 (67711 (6764) 11757) ($7511 07441 (17371 040 $60.0 $169 SITS $181 3187 $193 $199 1205 $500 137011 (YSI) 75688) 126811 MU) (2687) IWO) $600 $239 $245 $251 $257 520 5259 5275 $100 ($6311 0620 13690 116111 (36041 06971 11591) $70.0 $399 $915 $021 $322 $333 $339 5345 $70.0 (1662) 1666) 7$645) IW11 ($6541 (1626) 11,521) $90.0 $379 $385 $391 $397 1404 2410 5416 ICAO (1492) ($485) 11470 114711 04651 ($458) 118881) $800 5450 14% 1462 $468 3474 5414) $401. $900 (NM ($415) MOB) 154011 (53951 (388) a3/3f) FY 15E Net Leverage FY 15E DebtProved Reserves (SSICIe) 1121.1EX Gas IS nx101 NYNEX Gas iSYncle1 11.7$ 1235 9275 13.25 $3.75 435 $4.75 $1.75 $225 $275 6325 53.75 114.19 $4.75 $300 262x 29 4. 20.0• I7 4x 4. 15 44 130. 12.4. $690 $0 0 $30 529 529 $29 $2.9 $2.9 $090 1714 15,7s 14.0. 126. I14* 106. 97. MO 52.9 129 $29 $2 9 $28 $2.0 $24 2860 128. KU 10.7. 9.9. 9.1. 354 79. $50.0 $2.9 $2.8 $28 $28 $2.8 $2.8 $2.7 8660 lilac 924 8.13. B.a 7.5. 7.0. 16. O $60.0 $2.8 $23 $28 $27 $27 $2.7 $2.7 $70.0 8.I. 7.8s 7.1. 6.7. 6.1. 110. 57. $700 $2.7 $27 12-7 $27 $27 $2.6 $2.6 $10.0 15.7. 14. 60. 6.7. 54* 124 49. MO $2.7 12.7 12 6 12 6 RS 12.6 32.6 MD 574 55. 5.2. 4.9. 471 45x 43. $90.0 $2.6 $26 $26 526 $2.6 $2.5 125 FY 16E Net Leverage FY 16E Debt,Proved Reserves (S hic le) NYNEX Ge9 (I'mtle) Nina% Gas (Yncle) $2.25 9275 23.25 23.75 439 1175 5225 3275 1325 53.75 14.25 $4.75 $30.0 1322. 10210. 91.1. 78 74 691x 61.5. 55,3. $30.0 53.9 $39 $38 $38 MI es $37 $410 36.4. 34.0* 31.94 30.1. 28.4* 268* S.S. $400 53.8 $3.7 $37 $3 7 $3.7 $3.8 $16 $810 2064 19.0. 10.0. 10.14 11.44 IV. 16,I. $500 $$3.6 $9.6 $36 $36 $3.5 515 131 800.0 1294 131. 13.1. 124 1234 119. 11.6. $60.0 $$3.5 $9.5 $34 $34 $3.4 53.4 13.3 270.0 10.4.. 101* 9.8. 9.54 92. 814 88. $70.0 53.4 $33 233 $33 $3.3 $3.2 $32 $100 9.1. 7.9. 7.7* 7.54 7.4. 72. 70* $ O 53.2 $32 232 $32 311 $3.1 $3.1 $110.0 164 14. 6,3. 0.1. 5,0. 594 60. $960 $0.1 $3.1 Sal $30 $30 $3.0 12.9 &moot Lboacts literasonts9 FOUnot LP for site lbeavOng conounts no: cove.n1by D8 PROMO. NoIIMI4tfl flaunt ream 'Mamba9 conseet ASIVALI45. 0I4r AMEPEIJARECROCO,FAMZEPCLISCIWIKAOPCt04APCPVAROSESA(SEVOEMSA(TPatIEW and INWX ffi ID EFTA01097773 13 January 2015 HY Corporate Credit Energy 'Figure 100: Antero Resources Financial Summary Web hey ban. .CO. NUNN CNN* N144 O11•31333•01014) 4em apt! 13410 ).134. )) ma O11•31333•01014) r 147421 1444.11 13410 S15h tr10144 110011.0.04),041,7 :I I 017 V024 WIEEMWEEISCEIMMEM M71EMMMIMEIEMI Proems 414 43: ara 11411.04 11.1 4.040, Nan 2)04 rimMOO ▪1444 3.1 row 11,4 444 5I 105 ▪ 00)(4v, 140 IN 241 "5 0432 ▪103 31) 11411.04 11.1 4.144, Lurl 3313111.th Moms ire id ef e2 a. 311 004 171 IN 027 11) 133 52 Ie IN Itl IN 443 141 N 31 IN E611)0 'TS), 2O IN Caen 0244 257 IN 1144) 431 33M 11113 114 0011417 0004 42/ 4.4.14071 114. 140 09 1411 III 6 3e IN 1004 046 233 31 IN Sacco. 15704 (Rl IPA Ma 404 an PI LT41IMMO 4.11414•Sge) Na OS) lit In fit an OSP 1.141111004.1•01))4144412. 171 410 IN tel 102 440 40 Cavde 01:441 slab Nim la 40 SK040 577 fen 1N.10 el INN 440404/0044.100 c1.40 tlN "a Mn MM OK 170431491 NN NW 1.11 11444.1440400•11 100% 1144 C.441144$444•01441i 47370 11412 421240 72201) mob 13.103 17013 171142 4404: 004440 II% 1411 1121 MN MN MM $4.4, He lab lee 5140 04 404.00 OR.% 104 271 344 313 Lt“ Ill II ZS 4101.40 0 7040504 3101 I IM . bee 547.34 112 47 570 IMO Mail MIX 444004 P•nar.. 01001 NY 92 1.131 1447 1301 171 11.12l 5 0140 0 704 0544 1.313 IN 05 1311 544" SC 16 0247 NM Weft ILI4 lob thethelea beg 111•4 OLIN "-4 41213 Nib MANI 111.193 WAN 110.447 IOY 1.04430113414•1(0144.) 11.11 KA Mn 3131 1111 NA 1191 Pon. Omana)111.0.0441143 1144144.14. 1031 1323 Nn all NM SIM WO UM MI} 4.1.0 C44% 1031 1121 NIt 1033 32 30 1034 11,3 NY 3221 COLA 14 1121 IIN II )1 III. 024 1191 M0, 1422 CIA 1031 1331 MN 1073 N33 -a Ur 1452 NS Ofmeructewe am SIX al an 1213 NN LIM IMO UM ire nr Esem:e pro ,6 s00•104 NN 1147 044 lee 33 3241 WO We MN "mN5*2 7114101 MIA NN NM NM Nat NM 1031 H. N.R Ha Cal ILO 1043 AO SO 43 KS Ha NV be tee Cels Mle PM nn 11.3) WA UM Pe Owes M. Cfellilw robes 132 214 241 237 IN 3" MI 50 Cew Taw 4 (I) bee • f ASWAN 4 Orakpere .34 Obl 032 CNA 0.337' eel 01 NI (I) 41 PT C444. One Pwet • blown 1. 144144417 11,g AI6 Pao C04441116•111)40. Crow 01 37 4 nom CAW C444 40404 0440 94.n. 111 461) Om MD .21)3 vAM 0200 0.932 Weans twee 111 et 11111 1911 5171 101 no•Csienit 0101 MN) 0110 /7771 on RUM 100 0.334) GLOM OwlettArA0 IS 1211 010.04440041401 11. Cul Ms W ANNUM 4•44 OTh 01113 1110 INO 3•10140114410•14 mw 17 If 11 17 eld AO 1,321 2131 SIM 23)3 lee 4321 Were • w ISIS 1144 1321 SM 311 21N " INS 1074 101 3171 4.121 4134 1217 I/113 9011 NY Groat bun. 44).-0. 4vn ;r4 arc no>) $ 12b4 I27/: 13% GOT e4A 00114.40 00077 NI KA NN 7704 -C 0C IIM LIN bob 91111134 • \C,4 rheas i I C.44... 1.0m( 414 474 114 111 414 lb 431 ▪ Pt 4" on•corom Sat 3b SI. IN • 4 734 I4 3304 xw Mr 0.44R041 511/ 331 234 It 42/ 404 IM 0440,-.44,11444,44 15 b. 3341 N27 MN 1044 NA 034 Na N▪ Y 14▪ 27 1214 1110 11 )6 UM tea 044 1.156 1140 655 C Isitel 44901417 01144 01. Odin Remus. 1)0 .394 4 Maw anmh, • CHI .4•40414. se Cie caw*, vanaetweeet 3.40)44 7.'044, rout 3231 3014 4134 110000203117010 0,244 7414 1143 Vappainan 0:40,4 Wad %N. P kW.% 11.4000•10•411 sl 340 141 MS hen"anti 04 bibrallas 4.4.2xnamn Cal 00rols.4.01, 0444•2•343. NS. G. Cesubb14143 411 403 7AN 1 I No C4 M OM .1141. 0.001 1442441404/ O 4~$100 7451. %Oa 7.% 25% % Pawl 03414144 IM 21% 27 1100.4042.4015.40 A• MI :OIL ut. € 41114. 000 44441003/47 575 Aiwa Lb IYMII 64.? 26A II S 004 Serpa *006..414. 140 Rowe 41y.4nr1146) 4130 01% *Pa 204 444021140147.041412 410 brow bowed be Pe non 2415% 1101% 1:440• PS Cl Iterearelre 1430 1921 5$121 44•1004 4.111 14044011/41111•2 Wane • 1201044 ▪ 044440110111 11b V 14 3115 71% ett.de Cr 1: 0014•10404110 01470nal 4.14404% W40.6 haeiedwitene 31111E era 4.104 is ea frown al. S. 1.0cenahva -0175044.4.401' MehaN44•1/44017MOIC41C10,07'74nnan.4mar (041141141? b $3 011(32.121314free 0 erelaSN 530.W.stanera ettitben Nottlab &gear &Ste 811a one COTWORY NN Page 120 Deutsche Bank Securities Inc. EFTA01097774 Figure 101: Commodity Price Scenario Analysis: Antero Resources Sensitivity Based on Bloomberg Consensus -‹ A n I WOO WAIL% Gas :S. $1.71 9302 $225 $097 I FY 15E. EDITOR (S $2.75 SSW 12.25 SIM 5175 11.101 µ26 51.276 $4.75 61370 hf‘ILY !Ins 51,75 893.0 01.64/0 S $225 (41.529) FY 15E FCF (S Million) $2.7$ 414491 $126 1612101 53.71 111250) $425 01.201) $425 121.111/ a $40.0 1934 vas, 51.124 $1218 $1.313 01.40$ 51.502 a F $00.0 11.067 11.162 ELM. $1.351 51.446 51.540 SI 316 MOS (51.526) WOO (11.401) (11.437) 111.315) 111.3471 1112251 1112581 91./381 151.188) 151.018) 011.079) 11857) 11989) 11867) a F WOO $700 WOO $1.199 $1.332 51.464 $1.291 61.427 $1.559 $1389 $I.521 51.651 $1.483 $1.616 61.718 $1470 11.711 $1.543 PAM 51105 51.538 11.767 $1.510 12.032 WWI 0).20 570.0 01.1111) 1600 0 1.0391 (SLIGO) ($1.071) MO) 11.1031 it$12) iM6O) 91.0141 IMO2i 3770 ($5251 (3603) 035) (PM) (1)46) MN) 16811 (1591) 11.912) re' $900 $1.597 $1.692 SI.726 11681 51.976 32070 52.165 SSA ($817) (1.927) It739I (16181 C41691 04701 11310) FY 16E EBITDA IS 012112on) FY 16E FCF (5 Minion: 111.1F X Gas :S. in 1,-i NYSIF X Co 11.75 112.15 1275 6.25 µ75 1425 µ7S $1.75 $225 1275 15.25 13.75 µ2S µ75 1300 1442 $1.039 11234 51.433 $1.630 11.827 $2.024 890.0 (11.460) (11.274) ($1.0681 119Oi' 05291 (1313) (17151 6600 51.038 $1.235 $1•32 $1.527 01.629 $11326 60023 52.220 $400 (51.29)) (51.091) isoz) anal (15321 ($346) 1$160) 150.0 $1.231 VA* $1.824 $2021 S2218 12.415 $50.0 ($1.094) ($901) 11722) 112451 ($3491 (1163) $23 0 $60.0 11.428 $1.625 11.822 $2019 $2216 12413 52.610 $00.0 lath 0725) 10539) 153621 (MS) $20 $206 $70.0 11.624 11.821 $2.018 12215 $2.412 12609 $2.1)36 $704 0.728) (SS42) ($356) 111691 117 1203 236 $100 51.819 $2.016 $2213 $2.410 $2.907 $2.004 $3.90, $10.0 ($5451 0359) ($02) 5200 1306 $572 $103.0 60014 $2.211 52.4841 $2.666 $2102 12.999 $3.196 $90.0 ($3621 (SIM $11 $197 $383 $569 $756 FY 15E Nei Leverage Ey 15E Debt Proved Reserves (Slade) I,/\1L) Gat S 'Ic m:fer 5175 $2.24 SSW 91.11 $3.75 $425 $4.75 $1.75 $2.21 7$ $125 6.71 0 25 64.75 MA 3.7x 335 3.0* 2.7. 2.5x 23x 22x $300 SO.? SO 7 06 SO 6 9)1 $0.6 $0.6 $10.0 321 29x 27. 2.11 23: 2Ix 201 550.0 $0.6 SO 6 SO 6 SO 6 $0.6 $0.6 $0.6 $60.0 2/3x 213x 243 2.24 2.1x IS 124 $50.0 $0.6 10.6 $06 $06 506 $0.6 $0.6 SOSO 25x 23x 21x 2.01 LW IS 1.78 $00.0 $0.6 SO 6 $06 $06 506 10.6 00.5 O MO 221 21x 2.Ox LW 1.7x Eh 1.0x $700 $0.6 SO 6 SO 6 SO 6 $0.6 50.5 $0.5 $80.0 20* 19x 1.1x .J. 161 Lk 1.5x $80.0 $0.6 SO 6 10 6 10 5 $0.5 $0.5 $0.5 $90.0 1.9x 18x 1.7x IS. 15x 1.4x 161 190.0 6,6 506 SO 5 SO 5 10.5 $0.5 00.5 FY 16E Nel Leverage FY 16E DebtProved Reserves IS MC lel tinIF X Ow fel NYISEX O8.(1Yncle) 51.7$ $225 9275 1;125 6.75 stm $4.75 51,75 6225 1275 63.25 63.75 LI 130.0 49x 40. 3.3x 2.9. 2.11 23x 2Ox $'0.0 W.8 SO 8 $08 50 7 507 SO 7 to 6 MOO 410X 3.311 29x 2.5. 2311 201 1.9x $400 10.8 00.8 $07 $0 7 W.? $0.6 tO 6 $50.0 34x 2911 26. 2.3x 2Ox 791 1.7x $300 $0.6 SO 7 SO 7 SO? $0.6 10.6 $03 0 $60.0 291 25* 2.3x 2.01 I is 1.71 1.6x $60.0 $0.7 SO 7 SO 7 506 30.6 10.3 $03 0 070.0 25x 23x 2Ox IS. 1.71 1391 1.5x 170.0 5O,7 $06 106 106 915 10.5 tO 5 1110.0 231 2Ox 1.9x 1.7. Ikx 15.1 1.4x MO $0.6 $06 106 105 915 10.5 64 $90.0 2 ix 1.9( Os 1.51 1.5x 1.4x 1.3x $900 $0.6 SO 6 SOS 505 10.5 $0.4 $04 &tiro, Owesetre any. JAWSg f Awe CP toe me Ionrwrog inerpOWS nor coati/ by 067100 7o By forocass fesproneeKr Okarbppanstemrt 4srynyees onSr 041010. 041.8aSCX0 4ANCIPELM$44.4414.4010.0A.SPLDVARCIT,914.51WEN.$44 Was 77 Wood ni4X af AI EFTA01097775 13 January 2015 HY Corporate Credit Energy 'Figure 102: Bonanza Creek Financial Summary 11044 Il 623%6 140143021 140 44.0-.944 00401 15.441 . 1.330 2.6. 140044 9331 03 400.:.1.924. 1.e0.33 1.040 ..;c 10 <4 .44 131 la 162 ' 122 11.6046,31.090.36 .13062 • GM 00.4140.1)14 14413444403 t6 126 131 44 162 146 22. 422 044.1 co, 10 35 36 St It 76 129 000 6070 440 11-03 Ill PI Oh Ill (ill 16416016441030 27 14 100 335 IN 251 ODA at 41 14 100 10 taa 47 44 40 34 44 10 1001 $ 11 40 037 140 41140 17 31 26 31 126 119 030116106413/ at 24 Mil 0% IWO 00444 287116410700 a• 132 18 113 • 1144142403 15 N 43 35 181401174100•91140.111.1 IN 236 N1 316 961 P5 165 LT116110014 044 .11441664 IN 214 313 327 815 346 NI 165 NIPS 0000 4041 9422 10513 1741 9141 10219 $726 9112 9418 14.441 044 We 040 6411410 400 3M 315 472 401 115 420 28) an 11400413.0444 Dos 300464.440464434440444 006 2.114 204 3326 3/300 3037 430 1402 5173 1073 2644401041644 Fro 110:0 442 416 aN 333 32 00 530 374 433 Den gin/ 014446ci 11004 11118 1317 1370 1.333 5.363 2111 1610 1164440 rnoieStero 17.41 1216 130 170 031 0054 8140 NN 0 4 06 031 6 010414 0406. 7t 94 101 14 S7 •04 205 353 0604 10. Prie 4.90 4101 66.14 4135 P.M 011 4103 6110 600 6174 rad tEl.to INKIcef 1233 11134 1143 1.78 137, 2441 4163 308 5.113 06 60 46.4 46‘40 41.1. 870 7330 8771 7068 4421 051 0711 054 14001464 4 00460 44•41As tow Pb Prat 0444 147211 5738 147.72 670$ 17041 15121 6061 15132 4{815 1410044 11411 11216 1016 M/0 11619 114.30 SK i7 10 10 PUS 04.4 1410 Nm 1744 0010 MAI 044 1826 49 27 181 504.1. 0313 132/33 0031 12130 0443 43.15 1007 004 1214 046/04 4.40.4 04.13 0132 523.70 5033 117.14 0312 MAI Pam 132.0 Woo: 54.0 1130 00.0 $336 1.454 3344 021 1A ars 30643 140.4 In ADZI 3. mug 14201 Lou OM 4(414 04, 0136 15615 r.:4431 0 10 00.17 61024 14344 4027 1300 $5117 0027 1033 O2$ 4027 12020 144.17 1230 $093 19 1 PIN PON 146.17 12110 51100 44815 EM 040rIo.: (84262 4014610 53 $4 97 90 144 an 165 UI C4444 164.6 lc* 111 69 t• In/Cy. 0441 112•1 11311 0571 111•4 pin) aug 14541 044.0 heiVortni 000 23 1111 13 a 93 340 A0140 1.31 04445.06 141 011 III 1413 71 IMO 1104 00 047 Wag 13441 Cnnia.31844.0 1 1 10 17 a 50 3 13 142.63041.64 021 0 42/ 05 1112) 040 2003.4 /046 400403144140004$110 101 021 116 W 4111 0 42/ 060 0 14 4441 1141.140 wPOs 46 17 NI 431 37 13 4 1111 • 5001400 4 Cese 340 330 309 181 434 KO 503 • Cam 0064 WO 106 01331 33 40 0001 466001 136044 0440 0003144.3101,4411410.60 611E 103% 52% 619 70% 30% 59% NA 79% 6000 , 004 6516 M% 79% 996 9)% 444 61% NA 74% 1.1110801. Sumo 002200 40344.1ta 03100 Praell 44118 5244. 2124 9353 1144 7.574 734 53.14 210 re 54e Oat 41111174 42. • • • 1104 1104 Ir • 0461321400[ I th 14 Ia 1.4 2a 20 1.14 1414060034101131.1128 6666 1634 1730 17.21 2721 11144 11169 1215 1310 014060.0 0000401101410 4901 112.51 0420 SIM 116.12 MOP 126.11 Ian 600 1600 Cataparez 1440.110: (1404.3CtopEn414 4: 0141 ,e060nOot er4 41,4a 234 44043 (COOS n re 60046 141NON/r C0614 1.104.44 6460p 13 26.40466 {fICWISIO. 44 am Ill 044.0 4040. 14100 PO 119 10 003 Apt004.8.46.6904 421 Sinnbe 6046 assann <64 41c.4 ay. 44.4464 000.331421 33 46 or terNW, 114611441444 4411160)634 1.0141001141 0411 .404.4 A404.40 tato ea 4. 040013414140194/1400 63 70 1.q63101 n ^00.4 +(^ 9.05 n ICs 27% 9304 0_ NY 1400.016401 4020 34 173%1r 4144•811 It460•100601 SO 175%59 %40'13 40461110144.100 (0.10 373% 000 06001401414144 1011911 191% TO01 001 MI I✓CI R(40, 44 41644 05 IN 14.30.104 917 MI. 0030 0:46 44.411Irinlll LOS 20 1/31 2004E PK 11.134246 11•40000184 1.422 644 moo 6.104 200 41% 1141.1163 (11.011194 44. 1.437160 .40. /4104410104/ 144 Tam 401414032% 124 .4 sw 060000 SOu• At DAR*11 8011•01C0166.144 460 Page 122 Deutsche Bank Securities Inc. EFTA01097776 Figure 103: Commodity Price Scenario Analysis: Bonanza Creek Sensitivity Based on Bloomberg Cr—en, M 42366 3 I $300 t.Yr.IL Oat',* Ir<Icl $W $155 $231 $167 FY 15EEPITIM (S $2.75 $180 0.2$ $190 San $204 14.25 $215 $475 $226 $30.0 NYMEX Gas IS7nele) $1.7$ (12591 $226 (1248) FY ISE FCF (S Million) $2.7$ 11338) an7 113.26 $3.75 ma 14.26 (1108) 14.75 11267) - 5 /40.0 1213 $225 $238 $250 1262 $273 1285 140.0 ($3111 ($301) 1290) 11279 02701 (1M) 11250) MA 1270 5283 $295 $300 $319 $331 5.343 $500 (2531 0253) 11242) 11231 (62221 (112) 11202) VW $328 $34! $353 Sat6 9377 $358 5401 $00 (421($ CM%) 11104) 11153 0124( ($164) 1350 $700 $352 $3111 $410 $419 5431 $442 $454 170.0 ($1711 (1160) 11150$ 313 45150( ($120) IMO SW $417 5429 $442 $454 9466 5477 540 MA 14 (1 21 0132) $121) 15110 01011 (8811 1181) $50.0 1464 1477 $4.49 $952 $513 1624 1637 $800 (11031 143Z :$142) 1571 0611 (1621 1141) FY 16E EEIITOA (S FY 16E FCF (≤ NYMEX 0, rid 51.75 61.25 1275 1x25 $3.75 MIS µ75 $1.75 $225 1275 13.15 63.75 SOS 14.75 IMO 157 $70 183 $95 $108 $121 $133 130.0 05245: 12391 i12614) 112071 CMS) (1183) IWO) $40.0 1129 $142 $154 $167 $180 $192 5205 $•110 11175) 0162) MISCO 111371 ($MN (1112) 1100) MA 6261 5213 $226 5238 1251 $254 1276 3%0 (6105I 1192) 11791 an 15541 ($421 429) 100.0 $272 $21)5 $207 $310 $323 6335 £346 $50.0 0341 1122) 1$9) 54 $16 $20 $41 $700 1344 5356 1310 1382 1394 5407 5419 170.0 536 $48 161 173 $86 198 1111 WA 1395 84011 8420 1433 $44.6 5458 $471 $W 885 198 1111 $123 $136 $148 1161 WM $457 5469 saa $494 $507 $520 $532 MO $1•5 $156 2171 $1113 1198 1203 1221 FY 15E Nel Leverage Iv 15E Debt Proved Reserves (S rilde) NYMEX Gas I ) MAW'S firs :5 idle) 11.75 1225 13.25 6175 WS 61.75 $1.75 $225 8275 1.25 53.75 14.25 $4.75 130.0 769 69. 6.4. SI. 5.5* 52x 19* $30.0 $2.8 1.2.8 52 7 52 7 521 62.7 92.7 MO 539 4.9* 4.6x 4.44 Aix 1* 37x 10-0 $2.7 32.7 326 326 52.6 $2.6 US 100.0 030 38* 3..6x 3.44 124 al: 30* 3504 12.5 225 12 6 $25 52.5 52.5 $24 2M0 3.1x 30* 2.9x 2.7. 26 264 24x 160.0 52.5 $2.4 12 4 12 4 52.4 52.3 $23 170.0 26x 25x 24x 2.14 224 216 20x 170.0 524 23 123 123 23 52.2 22 WA 224 22x 21* 2* 2* 19x 1 ex SW 52.3 23 122 122 522 52.2 $21 MA 201 19. 10. 104 1h 1.7x fix $800 £2.2 122 52 1 S21 RI 521 $2.1 FY 16E Net Leverage FY 16E Debt Proved Reserves (SMCle) NYNEX Gas (S'mcle) 331E X On (SThcle) 11.7$ $225 275 225 $3.75 $4.75 61.75 $225 2 53.75 $425 14.75 $300 24.1* 19.5.. 16.2. 13A1 1209 106x 9.4x 190.0 53.3 13.3 $32 $3 1 21 53.0 $30 $400 99:4 88x 7.9x 7.24 6.6), 689 5.6x 1•30 53.0 $30 129 129 128 $2.8 $2.7 $00.0 56* 53* 4.8* 4.64 424 4 Ox 37* $500 52.0 2.1 $27 126 $2.5 12.5 $24 $OSO 36* 36* 33x 3.14 2.* 28x 26* $800 52.5 $24 $24 $23 $23 2.2 $2.2 170.0 2.7x 25x 24x 2.14 2.1* 2075 1.9x 170.0 52.2 122 121 121 120 52.0 /LS 180.0 221 20x Eh 'Si 1.71 1.6x 1.5x SODA 52.0 12.0 11.9 $1.9 11.9 51.9 SI.S WO 1.7x 1.6x atlx 1.4 1* 1.2* 1.2* 1800 51.9 $1.9 21.9 $18 $1.9 $1.8 $1.9 Sarre Otreso/e Sank tooningMona LP for re anomengoanyvvernotcovarecla ON?M0 W. me orecopeskgWel Meta E'Ea,n0ng constants. avower or* AAWEICAASCO.CXCVANG.S.E0SCA(MNRUPO.atIPEPVAROSE.SA(81VGEN.SAUPLAtiLW end WPX EFTA01097777 13 January 2015 HY Corporate Credit Energy 'Figure 104: Concho Resources Financial Summary - ASS 4111114 IC- VC1410 /01.Uranne ZS lInft Sa MP 001014414.1410 04941 Mann INN OP unman now WINN,AS 041.1.1419.1404) 040 S. 0.101/ KIM 42% Vienna SIP IN446•914 111,041/1.4010 i0.4 0 10274 14411. tan. /1:1)4v0Z09 0441.441100044, 1 4.01 JO i 0 MDDI Malta Ca 43? CO M Vf 2322 1.146 INS 1230 O141.1.14.0.2 La .11.010 Za.11.411•044 IP Nona CCI 402 C41 7t4 Al 9W 1.14 19L 2930 M•443 Cos IN IU In IN IN 174 401 IA ON Meal 14.114311•• , 0)0 On M ta. 0101:02).11007.4 IAN 101 Ina ON NA 271 916 DI 217 97 NO VI 613 173 PIT a6 91 .29 717 1a It) 10 79 IN iiiren 44 4 44 0474.00001 110 10$ I I I 01404,41011241014 in 1171 0 IN 0021 ( 04I 0 7I la no can...nos. 11 A 21 20 It III II 4I III 0011fa etwz N la IV It 4/2 744. n em n 22 M 9 IN 201 29 MI I4 11400444 20 171401001)141.10004 ISIS IAN INS We INS 100 IASI lali )100 trUCI)1794flesPer IAN inn 1/93 IMO 1574 1)4 In& It UN Ann WTI PIN )0011 44413 914I MN 43213 019 NO UN ft 44 7714 004111004•1000.04•40421 244 3114 473 414 IN 411 442 301 LC Ke0.0101.0 Dile CliforreN142/ACe•OlIikaTirtli 1114 1000 10.40. 210•4 22418 Y•14 alit 113 AIM ID•Den00. C. AD.144 0 SAS SO SU 170 4u S72 70 Cat 1/1 errteg CM Civsou .21.10 SAO DSO SAD 1230 C10 2.1514 14571 ICAO 21.01 1101.4 Od AD 0411, MY oea 0024 410 Mit NH 44 It 100 SOD Tat C.4.00 001.04•404. Sal EIS • $410 14411 Man 27620 3711 a us T.140.4.00 0.01.7.0/070 110 1191 1113 103 1141 1114 110 IUD Tout 44.4.11.01411114:41 UM 710 700 eel& 111.0 74 4 4454 11 MN na•fla. • Opeollini Mateletpoulas rnalten 107.) SIN PIN fan MN MO INJ4 OHM 0101 .04 040 SUN 1142% 130 1127* 1.13 41. 4012 StrIe SUSI 1101 GSA SLIM SIDI 13 44 /AID DA LIU 4327 S31) 1401 0016 1220 WY 1341 0433 fan 43437 41434 230.9 /2111 44040 item fah DIM 01114 17..9 VW 127.71 13443 NOM 10722 111.063 144 SIX 1414 SSW OP 4471 033 10 ICS I.0 03 440 II 0 40 SAO 110 1240 1210 NIP 111.111 111.1 110 12144 3,44, (ID 01•40 04 4170 lila 1111 41912 1410 100 11224 417.17 11224 hUtstlotea 1444$ MID NIS $4421 $4127 sass inn 14334 114414 70.4 CNA Pow 010091.1.14.94 447 41 471 444 122 ISIS 1241 IDS 042 Cent 0404 ( 7/ Oh OD 01 Oh nie la 111 lot*Cso• 001 MN POI 0111 1700 Pan 001 1/00 PAN Cup. n ha Neece.)C..) 4 6 9 a 4741 Ph 0 41 01 A 0. Can Aaata 4.0a 0/ 0 4,44 (IM PIP 041 1 771 SSW 00 lints D. CTIPIll.., tan, 44 a 44 21 42 10 n ea in tn. C nr An. 0)1 01 Oil OA PM 071 1 41 0 740 Cla 000 a .4044 0 0 04 432 IS 4404•00400441.44/444144 410 0 0 11 001 Pill 041 1/01 NM/ ON 00•01•010 0 0 214 40 091 40ner LIN Pala 390 3,17• 2211 327* IAN 2707 1340 C.v. flan 1an "my C.41 249 40 W Crowto10410 44.00 Sae 1020 .0.2•4 GIN 30 241. 30% 130 2471 14T 4, 4•Jil Cron 97. 30 104 101 191. MA ( 1144.9119141. Pr%akr6*. hnir .9.4 Conan ran) ▪ 434 1194 INN 444 19 :Le ic Own 131110.1 0▪ 4 024 014 024 44 00440194.4 att 22. 23. 324 110.44100,241 ▪ 22. 23* 224 0040p01Ass. tient MU 1703 DA 17 1431 14 42 17Z pear•nos 0••••••ii Mow,. anti Inn 019 111114 $22.4 VITr Crew 0440014D ;I. w,... OtennennanContatonana Kat swain 40.100 22 140/41/0044140100 14 10*On. anseargard gronant 44 .1 N. noniron n Rare" • NalBann 00024 IACLOM 111329 mai 0004.400.001.0I4 NUN 400 44 0 400.4.0401040010 7:11270 V2205 a 7aCt vs tOm er•00 0010.9 4,4,22 wt4 )0 tot ol Gad ata•Flaati )0531 4).140 IQ R2 04. 7244 area Cr 30% 33% 1 04402 00~1 4,17. 41% 04040 Gra 40404 0.1,•mes U.4 IkInow ZVI to mat Lama..., ZY 77 23 25la:aortae 2tor laam Oa at2 try Roplatatat Cant CC% 4,1% Ian vet... ass. ma.= COI arts iliatanat Peet) am 944.00.040, San /On Oa DO INI are a inatraaket aim ear a NW Loa bansMa 044400 404 400304.44 994 en. Masc. 1990 zonc 074 MO 4 00. 444 navvy $44 044440 taw 74,14 111. Ifte 102 zat fa, 041 E O19044 01•4 11020 CVCD1104 74. s Va•ke SARI. Dann IllaD. T•a• Pet. 11•00014111121 713160141700 1.74 Sayre* Dfaiaaldr Balk COmperly an. Page 124 Deutsche Bank Securities Inc. EFTA01097778 'Figure 105: Commodity Price Scenario Analysis: Concho Resources Sensitivity Based on Bloomberg Consensus FY 15E FUIT DA iSVif.o1. FY 15E FCF N. //LX Gas UME% Ga: 6,10 O w $135 3225 32.75 PIS 8175 14.25 $4.75 31.75 91.25 82-75 13.75 54.25 14.75 M 1.300 51,90 SI 346 31.377 $1,47 SIA98 $1845 $1.814 MO 5714 14621 (9550) (Mal ift411 113031 (3s21) e 140/3 $1.405 15459 31,659 $I.5150 11.810 $1.861 $1.711 esSg ,W13) (935» (S3451 46181 114841 (54521 r) MA 11.321 $1.8/2 S1.822 $1.1/2 11,23 $1714 $1124 $39.3 $575, MN) (8611) (14791 44471 114151 (59n) O MA 11534 sue stre :lyre 81.436 8114 $1.937 O au es474) (1443) (14101 14751 153461 (o14) 1 F 170.0 11.746 $1.797 $1,147 SIAM 11.948 $1.999 $2489 smo 4371 nie) ($37e (13411 tien 152771 (ss) $800 11269 $1.910 $1.950 $2.011 12.051 $2.112 $2.1151 5800 15541 15136) (S2104) ($2/21 t$2401 1520e ($116) Ut/ 51.972 $21122 taon en, 12.174 $2224 $2275 »Io leaw 1126)) (S2376 (62031 [SUD 111361 (5106) FY 11,E FUIT DA if; Mil on FY ILE FCF bu' IIYME X Gas (S.mckl 6IYMEX 6,, I 11 75 tl 52.75 13.25 53.75 $425 84.75 51.75 32.23 t2.75 $125 $3.75 84.25 14.75 $300 sn2 51642 Sun $1,201 11273 $1.143 $1.413 130.0 $1 455) 4129» 111.3401 4 12821 (112231 111.11)) 4 1.1103 140.0 $1197 $124 $1.337 $1.407 11.473 $1147 $1.617 5A00 41.316) t11.25e) 111.2011 411.1431 (11A131 i$1.023) (MO) $50.0 51.401 $1.471 $1.541 $1.611 5131 $1.751 $1121 $50.0 41.176) 1$1.119) 01.0511 015041 119481 'Seth eu» tua $1.35 $1.873 $1.745 $1.518 SIX« $1.9e6 $2.0215 560.0 isto3n 15879) MU) (11641 45071 117491 08021 170.0 51110 $1.830 $1.910 $2.020 $2.090 $2360 52230 I$eSeJ tee) WU) (Pei ii657) 11601 (Ma $80.0 5014 t2084 52.15.1 5.224 12.231 12284 12_435 5600 ane 6100) (3643) 45851 115281 134701 0413/ $9,10 $22111 12288 $2353 S2.423 $2.493 12589 12.839 sus tuai t$581) (ree) 6 4 61 n3;181 112111 (3273) FY 15E 142I Lcvcrayc FY 15E Debl Provecl Reserve tS MtfeI hi //LX Gas 'S NCIALX ! I, 6,10 $135 4.25 $2.75 13.15 8175 34.25 84.75 51.75 52.9 $2.75 $3.25 51.75 14.25 SAIS $30.0 3.4 Sit 3,I* 3.0. 2.9. 2.01 2.7x OMO $1.5 11.5 11.5 SIA S14 SE& SIA 1400 3.1* 3412 28* 27* 24 2.5x 2.4x SM 51.5 SIA SIA SIA $1.4 31.4 SIA $800 2.114 2.7A 28* 254 2.4 211 2h 850.0 51.4 IDA SIA SIA SIA SIA SIA $800 Sb 2.5x 2Ax 23* St 221 2.1x 980.0 51.4 MA SIA SIA SIA SIA SIS 170.0 St 2h 22x 21* 2.1* 2.41t IStt SM/ MA MA SIA SIA $19 11.3 SIS $80.0 St 2.1* 2.1x 20. 1.2* It I.3) MD 11.4 11.3 SI.3 SI.3 $19 51.3 SIS $90.0 St St I ax 18. 1.8. 1.71 St MS $1.3 81.3 $1.3 SIS $1.3 81.3 SIS 6E FY 16E 0801 Proved Reser Mc HYMEX Ges *ci< NYMEx Gas (Seule, 31.75 33.15 $2.75 13.15 53.75 14.25 4 11.75 53.2i 52.75 $115 537$ 425 4.75 5300 60. SSa SI* 47. At 4.1x 3.fx SS].0 51.6 51.6 S16 SIS SIS SIS $IS /40.0 48. 4Ax 4.12 19* 34 3.4x 3.2t 5,77.0 SIS SIS SIS 115 SIS $1,5 SIS 1300 3.9. 3.73 9Sx 32* 3.1m St 2.7x MA $IS US SIS SIS $1S 31.4 SIA $800 3.3. 3.1* 20% 28* 2.8* 2.5x 2.1t 169.0 $IS SIS SIS SIA $1.4 31.4 SIA 3.709 1.8., 2.7x 2Sx 24* 225 2.1x 2.ca MO SIS SIA SIA SIA $1.4 31.4 SIA $00.0 1.4, 2.3x 22x 21x 2.11t 1.91 1Au $80.0 11.4 SIA SIA SIA $1.4 31.4 SIS $90.0 St lat It 1.8* 1.73 1t 800.0 11.4 SIA SIA $13 $19 SI, SIS &un» oteet Stekettnenf-tilM00 LA For lbOovéner con:unes na conseilby DB Ment« Me Ancra ',Paume Mea &bot gromettut ons, MUAIf tAMICS1.0(CeFANOAFF{LTSCAMYRJAPO.OMPEPVAROSE.SA(SEVGENSµTFIA(RWend MX -o EFTA01097779 13 January 2015 HY Corporate Credit Energy 'Figure 106: Diamondback Energy Financial Summary if 4.1 1111% Pt: 140 U7 MO IS 34 66 tl 31 140 a 4 47 XS a It 4 a 41 In Il 13 00 101 4 14 47 1.1111110044 411310.0m 101 141 246 31 N 1.1111111104144444411141011 111 Mt ill 02 Nt WT • ends µW 110563 10711) 161 300 $61.0 0131 Inn 'wee «44 suai113 10610 SIM 1302 14 72 1421 1104 1263 Km Itta0134 Nagt15.11041001101. Ia PTO Pnatu 4Ow nog *SI I Ha 0211 $11 Ono 0 11,0.0.0 .11444 NO we Sc. O 6.1a0 Cots. µWO tall 16111 Ciaon PC. 051.1011110 1 IS Nµ 111 15011011.4. µe , µ061 6119 12321 leta (salmi Kang) µM OSP 106 1601 1090.0041144.01141101140 0211 1103 "Ill 10. (salmi WW 340 103 low 144611 51.µ02q 619 17144 17474 larneis I Opleasfi Vagin M OM Pia POP 3110 PIO 11111 Ax PIMP 1/2176 11241 3100 11151 11171 115.42 11111 mat 11 CAA 150 1321 1574 $2.2 1542 SIM 103 NM 00 /2111 1.14 at 721)1 12444 =It 12414 5076 0137 1.110 O0410401mso Ian 13101 0117 0713 1306 13444 SILO 111.0 1321C Ong 11101 11511 14 Tr Mal $4.10 110 37 no 11011.441/ 4241 IMP 1011 11141 11324 or • o PIO ma4 04 3447 04$2 11111 11011 11131 11.10 1141.? naugo11° 127.17 INS 102 i 1460214629 INx Wf 112AS 14124 Fs Coe It.µ: 101061,01.16001 .44 PS IN 344 191 Cow/ 14.0 141 Cm. taiongat Orniunes 161 01 IW UL (1034 MOH 101 Cams • 000 011.04044100.041 024 114 alti 014 OHM Cam.. 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EFTA01097780 Figure 107: Commodity Price Scenario Analysis: Diamondback Energy Sensitivity Based on Bloomberg Comte') I m $30.0 $1.75 $144 “as 5. $222 $147 FY 15E EEITDA (S Million) 3273 $150 $3.25 $153 µ75 3156 KM $159 µ75 $142 $30.0 N v \IL(( Gas ISITICIO) $1.75 32081 $225 32031 FY I5E FCF (S Million) ($201) $3.25 111981 $3.75 3351 $4.72 (MTh 54.75 IMO) $40.0 $209 $212 $215 $218 $221 $224 $227 $404 ($1481 ($145) 3142) 31401 ($1371 ($135) 3132) 830.0 $275 $278 $240 WM 3286 $269 3292 $50.0 C$1191 Oh ($M) µ92f ($791 ($761 374) MO $340 $343 $344 $349 3352 $354 $357 MAO ($311 ($259 ($26) $23) µ211 ($161 316) $70.0 5405 $493 $411 5414 $417 $420 UM $70.0 $27 $30 $32 $35 $37 $40 $43 $80.0 All $473 $478 $479 $482 fAaS $486 $(10.0 $85 $88 $93 $93 $96 $98 $101 $90.0 $536 $539 $342 $545 S547 $550 $513 $90.0 $144 $146 $149 S•bl $154 $156 $159 FY 16E EIBITDA (S Million) FY 16E FCF (5 Million) t0.1LX “as 's NOOILY. Gat $1.73 12.13 $175 4225 $2.71 $425 $4.75 51.7$ $223 $2.75 S225 83.71 $4.25 $4.75 $30.0 $119 $W $126 $121 $131 $134 $137 $30.0 3671 300 an) 1$78) µMI ($731 ($70) $•0.0 $165 $191 MN $197 ROO $203 $206 $40.0 µl61 if15) ($13) µ1q µ2I ($41 Ito $50.0 525.4 $261 3264 1263 $259 5272 $275 $50.0 $50 $53 355 359 $32 $85 $88 $800 5327 $323 $333 3216 3339 5342 $384 f00.0 $119 $122 $125 $128 $131 $134 $135 $700 $395 OP) $402 $405 $406 $411 $414 $70.0 $IN $191 $194 3196 $199 $202 $205 $80.0 $458 $40) $471 $474 $177 $403 $(02.0 $257 $259 $262 $265 $266 $271 $274 $90.0 5535 6523 $541 3544 3547 $589 $552 $90.0 $325 $328 $331 6134 6137 $340 $343 FY 15E Nei Leverage FY 15E DebtProved Reserves (S lade) NYMFX I tr'Clel NYMEX Gas 301410 $1.75 $223 8275 $3.25 $175 Mn µ75 M. $225 57-75 53.15 33.75 PM µ75 020 50x 49* 4.8. 4.74 4.54 4.5x 4.44 $300 $1.9 fi 9 $19 S1.9 51.9 $1.9 $1.9 $40.0 34 214 3.14 3.04 3.04 294 2h $400 $1.6 $1.7 $1.7 31.7 $1.7 $1.7 $1.7 $50241 224 224 2.14 2.14 2.14 21x 204 $500 $1.5 $1.6 $1.6 $1.0 31.4 $1.5 $1.5 $50.0 15x 1.134 1.84 I.114 IS* 1.5x 1.54 $40.0 $1.4 $1.4 $1.4 51.4 MA $1.4 $14 $70.0 14 124 Eh I.2d 1.24 1.1x 1.14 $70.0 $1.3 $13 $13 51.3 33.9 $1.3 $12 $430.0 11a4 0.At 0.9.4 0.9.4 0.24 0534 094 SO $1.2 $12 512 512 33.2 $1.2 $12 $90.0 07x 074 074 07. 0.74 0.7* 074 $439.0 $1.2 $12 $1.2 $1.2 $1.2 $1.2 $12 FY 16E Net Leverage FY 16E DebtProved Reserves ($ MC le) inklEX Gas IS me lel NYMEX Gas (Stacie) $1.75 $2 2s $375 $375 $3.13 S423 $4.73 73 5773 5273 3725 an 54 is 7813 $90.0 87x 65. 604 13.1. 5.9x 581 664 $30.0 $2.1 $2.1 $21 $21 32.0 $2.0 $20 $40.0 344 354 144 3.1. 3.14 34 114 $40.0 $1.8 $1.8 51.7 51.7 $1.7 $1.7 $1.7 $500 214 Zix 204 2.0.4 Ltd lax 1.9x $500 $1.4 $14 51.4 51.4 MA $1.4 $14 $600 13x 134 1.24 1.24 124 1.1x In $800 $1.2 $12 $1.2 $12 31.2 $1.2 $12 $700 074 =I 074 074 0.74 0.h 06x 06* $704 $1.2 $12 $1.2 $12 $1.2 $1.2 $12 $80.0 034 0.34 034 0.1. 0.14 014 0.34 MO $1.2 $12 $12 512 33.2 $1.2 $12 $90.0 01x 0.1x 0.1x 0.40 0434 0.03 014 190.0 $1.2 $12 $12 512 33.2 $1.2 $12 Sauce Davao.BMA abootAgMeat.LP Fa Me fafaxong cAspanas not consist ay laa Kph 31442 OA fawns foams rata abotabAy consems nods 0* APAEPERARAICESOC4FANOSPWSCASIASYSIAPC40ASFE.PVAROSCSASAGElanfTFVµIEW.A1War EFTA01097781 13 January 2015 HY Corporate Credit Energy IFigure 108: EP Energy Financial Summary bai 4.549 ta law IWO To /alai la, .0 KO laYeCt. Lion'( 0144 Y. fn itiya Ian a4 04 •10 PI MO IAN In In n 19 9 tit 91. nl IL it/ IA ark M. t it 413 eY II1A M1O OA 15 4.1 00 al Z eed 15 Iln Wen alamai N. RS NI PO a la UN WI WID•aita kada In a a. a a its4 le se 4ralinlatallaia ma. Ial a TAIG 1.40 a LW 0000 feee mye 4 111 125 TAIT 15 ISM 10 ▪00 Iill MI C05.44 fl u 05 1115 0•5 0714. all Ms 040 1/15 *52 HA .v55551 0* 15 all MSS 15 Ca 1,40 VAT AO 51.0405 tau" 5rir 00 5%044 1st 315 AM IV0 IPAli Mit :45 144103 SAM 056 5054 55 54040 Ma 05 as, 15 ISO Ale 544 Sala 54 5.5•555 45. 15 104 45 95 45 ••••• 54 *0 00 0.5•100 !SW. Me n.,, l0120 Mb 60,5 .1.144 SA a WM tit 9 5a 50.5.. 504 5 IP OA IPA IS 53/0 l.2.0 105 ISA 5054 45•0110 in Me t o: at 0.4 514 IT5 14 /54 0011 VISTII54554000) 445 alal WA WS 50 55 sot tell Abil 045550•14•055 .301 WS WI $105 005 WA 574 MS 010 15••••••05401095045 155•45 Ilse In MO ••••• 55 MN In ISM an LaoCa Sop 3110, 1119 4115 Mtn 105 59 AA' Mn IN. 1:4 9 RI. 153 0 5 21 Ran Mat PM ow MIN 54 In III a 545 MN Int i• 0 MA 011 I* la 4454055 05 ma MY Ills 5* 05 la 545, 59 na lissi 55 SA! In/ Id * lob STA 05 iii 5 /a we 00. • ota fan VIA PA 00 00 54 54 104 003 7..• .0 400500p 0 0 0 A 15 0 0 AM M4 0 5 15 5 5 55 IYtl 5.1 0.0 tln W W W fits In 0540•154A 0,54•44505 a at A/ VP 0 1,00 49) IAA 1,01 4,557445 m al 4 Ilb 5 01 • NIA 5141.444 110 dea WA .32b On, 0.80. nimI till EllA :409 41545rwet064 1 II 7. II 445054 0411050 IWO OM TI 009 OIl OM OM OK •••••4 04051550 • 4e la M ON 14 Of. nmt Ivento 45 IA) II TA Mn lye. Alma IAe Y. Cs Ron lisiteN Is II- M6 nL 8M NT i• a /La 15 1•10 SAN ISA IAA '$1 &JD II* IN/ IM 4481 awl lm 015 ZW) 05 int till 45 460) 41.• 00. A. P WS IP, 5 aaa a a/a 35 lb 5 Ib 4.5 PM fn lb its 5 i is lb Ilk Is So lb al Sn I 5 lb la lb lb 5 In 5 19 lb RA PM 05 95 95 YM PS 31.14 WO 1103 514 MOT ISIS4 atl aM O 5 WI MST 3% 4b lb lb 1 44 4b 1b le in 0.0 1 lb P. P4.55 • M.ea Fre 09 15 i In it) 14A AS IM Os t4504.0451 IT AO Oit N :e. 0.• • lea ‘ 5.00•01100 315 55 Sas.. 041 4.5 • 44•554 MA IM lm 05. 024.1431 •SiTa by*. a ea aoanaUrVaa arra anvialle etam We Sance7 OftextaLbat *WWII/ C IP Page 128 Deutsche Bank Securities Inc. EFTA01097782 M Figure 109: Commodity Price Scenario Analysis: EP Energy Sensitivity Based on Bloomberg O- isn—rur FY 15E FCF (6 Million) I FY 15E EBITDA (5 Million) hYsILX Gas 5 HYSJE X Gaz ISmale) 51.71 $220 5275 1/225 $3.75 $425 14.75 S).73 $223 $2.75 an 14.75 $425 an 693.0 2/.606 $1.563 $1.510 $1.677 $1574 $1.571 $1.569 630.0 113901 ($351) 11393) 12394 )1396) ($397) ISM/ $40.0 $1.998 $1.596 $1.593 61590 $1587 $1.584 $1.581 $40.0 ($3231 ($374) 11376) 113771 (1379) ($390) 113827 $A $1.611 $1.1101 $1205 $1.603 $1.600 $1.937 11.934 $60.0 ($356) ($357) 113595 )$360 <53621 ISM/ 11365/ $500 26624 $1.621 $1.618 $1.616 $1113 2/110 SI»? 6800 (33391 ($3•3) 123423 12313 <41451 ($346) 11324) 570.0 2663? $1.631 $1.631 $1629 $1126 $1.623 $1.020 57tio (£3221 ($123) i$32))) 15126 ($13261 ($129) I/331/ c $80.0 $1.650 $1.147 $1.44 SI 541 $1139 $1.836 $1.533 MO 4395) ($306) )1938/ i $309 (53)11 ($312) 1$312/ $ILO $1.652 $1.649 $1616 $1 613 SI 640 $1.837 $1.635 6930 ($2911 ($2218 , 5338 :SMI (13031 (5310 11306) FY 16E E8ITOA (5 Million) FY 16E FCF Million: llYsiEl( GaS a r 1 NYSIFX G ,cmCl..i P 11.75 62.2S 1275 µ25 µ75 $425 µ75 $1.75 622$ 1275 µ25 3.75 $1 $4.15 µ75 $30.0 51.153 SI IN) 6IXO 61227 $1252 $1.277 51.301 $43.0 117 537 $57 $77 $36 $116 1136 $40,0 $1 212 11 265 11261 $1215 $1310 21.333 $1.350 $40.0 $66 626 1108 $126 $146 $165 $116 $50.0 $1.270 $1.231 61.319 $1344 $1366 21.393 $1.417 $50.0 1116 nst $156 $175 $195 $215 $234 $80.0 $1.328 $1.352 $1.377 $1.402 $1.426 $1.451 $1.476 690.0 $165 1184 1204 1224 1244 $211 $254 670.0 $1.396 $1.410 $1.435 $1.450 $1.484 $1.509 $1.534 1700 5214 1234 $753 $273 1253 5313 $333 $221.0 $1.439 $1.424 $1.428 $1513 $1.598 21.563 $1.587 $1)z) $259 $279 5299 5319 5339 5356 $376 190.0 21.483 $1.507 $1,372 $1657 $1161 21.095 $1.631 693.0 $295 1315 $5)1 5355 5374 $394 $414 FY ISE Nil Lover,qo FY 15E Debt Ploved Flo6erve6 Mc 'e IFYLILX 62.5 Tri ISYMLX Gas ;5-rncico $1.75 $2.20 $275 1/1.25 5271 $425 $4.73 61.71 $223 $275 1/225 $3.75 5435 75 630.0 3ox 302 302 3.02 302 302 302 690.0 $l 1 fl 6 $15 $15 51.5 $1,5 $15 $400 392 302 3.02 3.02 3214 3.0x 302 $.40.0 51 4 $14 SI 4 $1.4 $14 SIA 11,4 $50.0 29x 29x 3.02 3.02 3214 3.0x 302 $500 SI 4 SI 4 l 4 $1 61.4 $14 SIA 11A 500.0 292 29/ 2.92 2.92 295 292 263 $140 si 4 41 114 $1.4 $1.4 51A $14 570.0 292 292 2.92 2.92 292 292 263 670.0 $1,4 614 $14 $1.4 214 51.4 $14 $80.0 23x 24 292 2.92 2.% 292 292 $80.0 51.4 11.4 $1.4 61.4 $1.4 $1.4 11A $80.0 282 28x 28x 2.84 2.% 292 292 SKO SIA 11A 61.4 61.4 $14 51.4 51.4 FY 16E NEO leversqo FY 16E Debt Plootni Reserve: l 5 bleie) NY kl EX Gas ;5. mc! NYME X Gas (5 mde/ 11.75 1225 $275 1355 µ75 6425 µ7$ 51.75 $225 5575 5325 53.71 $4 $4. $30.0 414 402 19s. 3.9) 315 31)) 3110 1300 $1.4 11.4 $l 4 51-4 $1.4 $1.4 $1.4 $40.0 34x 36* 3.7* 3.6. 3.5s 3.4x 3.4x 1100 51.4 $1.4 $14 $1.4 $1.4 51.4 $1.4 $50.0 362 362 3.6* 3.4, 3.34 3.34 3.2)c 5550 51.4 $14 $14 51.4 51.4 51A $1.4 650.0 3.4( 34x 33.2 3.24 312 3.12 3.02 660.0 SIA 11A $14 $1.4 SIA SIA 11.4 $70.0 321 322 3.1x 3.04 3.Coc 292 292 670.0 SIA 114 $1.4 $13 51.3 Sli 113 $NO 3.12 3.01) 2.9, 2.4 20. 262 272 $80.0 51.3 $1,3 523 $1.3 533 533 $13 $90.0 3//a 292 2.6. 2.6. 2.73 2.73 2.6* PLO 51.3 $15 $1.3 $1.3 533 533 $13 Santa 0,~B4nk. Ilbombsg Sn"» LP Fa Ole tonssrng c4~ts ro:~ ty D8»ø »24ø. :Mr ~Nes14u~ Jaa Blasornbny ~ei as~ mins On?: AMEFf&AASCSACY4FAINIEPE.1130411NRIAP00.4$PCPVAROSESA<SEVGENSMIPItel.72W WPX -o 1C) a> ID EFTA01097783 13 January 2015 HY Corporate Credit Energy 'Figure 110: Lightstream Resources Financial Summary Iwo sawn 4414.1044144 Oa PP Ca0/440442-4011 •pet s trotaa 1411 raverve 14: s4 c • .4441$4 04.. AAP 40 4 944704 .40144 41 al Pt IP 00 1Y4 40 0440 In i..1 la 144 IN 40 410 .10 P447.4.404.0144 teal a a al 0 * 0041,004 San fa YS Otl i4 al AI ul Ill la w OP r 4i DI 101 ...nal a a a is a la MI al 11.1 4.44.4.44 II 0 0 IP 44 In III 41a y.4.0. HI M. 44 WI 11 71 al 0 441044441$ 0 IP) 414 04 04 MI 10 la ,14.4.144.44. 4 0a0 Ill V lel Pall IS II al r4.0 a 4 14 P 0 41.144.04.• SI OM II R . 04.0 11 a nail O14401411•0114/044 DO *I f4 71I 10 70 W N1 OM WPM 31441104/44 4 1 1.4% 144 11104 PC/2/4 11474 PIM PPR 11171$ Dl It 110101 414 0 0 4.<44 1141 UM Oa II. H. 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As alt OPS couplet eeetatetwes 11.4444 04040044 en, 'wane, 044 .444 n $2' 14.444 144 10 4404 IPPip 44.4.44.0.40-h7 4 1,4 0444 4444 04 4. teteleflee• (04114404 144 U 31% I MalMIO ltekAp See.oweee 22 maw. 4 to 47-00 440/ 444,1 4410441 44 37% ) 44 • onea01ellSter %011(05(4414004.57 4441400/1004 4014 401 34 4.1.14%$.44.4.1404.4421114 Ike Olen IP 44440.11/41 1711 (PO 444100.1 'MI lm INDS IA* 140 1114•1414-414 40•11411 111 1174 0404•10•40.4 13141 41% II/1 .110 M• DOIOQ^ 1W 74111 0/ 117.114 • 0.a4. emu e•• 114 14LP1pf44444M 344•4144 440014 4045 Swear Oeverest Sm.! Conway ano Page 130 Deutsche Bank Securities Inc. EFTA01097784 Figure 111: Commodity Price Scenario Analysis: Lightstream Resources Sensitivity Based on Bloomberg Consensus FY 15E El3110A IS Mahon) FY I SE FCF (S lAtIlion, AYSILYbas Rmvlcl 60.1LX Gas el 11.75 SUS 1275 13.25 1335 Mn PIS SUS 13.25 13.75 SOS SOS Mn $141 1149 1157 1166 $172 $160 5191 Mn 1143) $1401 ($13b ($124) ($117) Mn $196 1202 1210 $210 $226 5231 Mn $100 me) (1201 0831 ($75) $500 $232 $240 $248 $255 $263 $279 MAO 11641 $56) 4491 45411 1$331 $00.0 $2?? $215 $293 1301 $309 $317 $325 4600 022) MI5) 1371 $1 $9 $70.0 $323 $333 $335 $316 $354 $362 5370 Mn $19 12? 135 $43 150 4600 $368 $376 $331 $392 5400 1406 ISIS 9400 121 $69 $76 184 192 4600 $436 1444 $412 $4(0 $462 94 /6 $464 Mn $121 $13? $145 1152 1100 FY 16EEMMA (S Mahon) IV 16E FCF (5 Million) 001LX (4as S ma41 IN 0047 G ,lei SOS SOS 1275 $51.25 171 5425 $4.75 SERI $225 32.75 $1.25 $3.71 M25 14.75 Mn $15 $23 $31 $101 $38 SO $117 185 243 Mn ($2121 MOD 1$196) 141691 01811 ($173) ities) Mn $65 $156 $93 5109 1125 $133 (5144( (1136) 1$125) l$1201 ($1121 (11031 Or) $50.0 1172 Si,, 1107 1195 $203 Mn (1761 094) 0601 ($523 (441 120 11281 Mn $226 $234 $242 5250 1258 1266 1274 Mn 1181 SS 116 $24 132 140 $70.0 $296 $312 $320 $320 $336 1314 SAO 930 $66 $76 504 $82 1100 1406 $366 $374 1390 $389 5406 1414 MGD $126 SIM 1144 $152 $160 1166 $176 $90.0 $436 5444 $452 1460 $4611 $476 1484 $90.0 $198 2.206 5214 1222 1230 2235 5246 FY 15E (141 Leverage FY 15E Debt Proved Reserves (51.1cfel Ipl NYMEX Gas (2Mcle) 11.75 $2.25 SIM 13.25 2175 Mn $05 1.7s $225 25 $3.75 MM $4.73 $20.0 12+4 11.4x 10.7. 102: 9.6x 921 $300 $2.8 128 $28 $2? $2.7 12.7 12.7 Mn Orr 64x AIR 7,7. 144 21x 66. $400 $2.7 $2.r 12 $2? $2.6 52.6 $26 Mn 18x 66.. 0.4x 6,1. 55.< 52x 55. 1500 52.6 $28 $26 $26 $2.6 52.5 $25 Mn 554 544 524 A.% 4.7X 154 MAO 12.5 $2.5 125 $25 125 12.5 124 0 170.0 464 454 4.34 4.2. 4 1x 4.0x 324 $70.0 12.4 $24 124 14 $24 $2.4 123 39% 394 3.74 3.6. 35x 3.4x 324 1104 12.4 $23 123 123 123 12.3 123 MCA 3 lx 2.9( 2.9. 264 27x 2 7. 150.0 1.2 $22 $22 $22 1.2 1.1 $21 FY 16E Nel Leverage FY 16E Debi.Proved Reserves (SEIC10) NYNEX Gas IS =IC) NYMEX Gas isYncie) II 7$ $223 $273 $125 2.1.7$ Mn 423 1223 52 n $1 25 75. 24 iS 24 25 Mn 1145x 74.8. 55.3. 4364 36.1x ash 36.0 $90.0 $2.9 $2 a $26 $20 $2 $2.6 $2.2 Mn 1924 1724 +6.3. 15/1. 133x 1297 12.14 140.0 $2.7 $2.7 527 527 $2.7 $2.7 525 220.0 10.3% 1.84 124 02. 111. 79x 714 $500 VA 136 526 $26 126 $2.5 125 166.0 1354 66. 6.0. 164 6.4x $600 $2.5 $25 $25 $25 1.5 12.4 $24 $70.0 504 46x 4.64 4.5$ 4.45 421 4.14 MAO $2.4 $24 $21 $24 1.3 13 $23 MOS 38% 174 3.134 3.5$ 3.45 124 = SOO 12.3 133 523 123 12.2 $2.2 122 Mn 3.04 294 264 2.04 2.74 26x 254 $33.0 12.1 13.1 121 121 12.1 $2.0 12A Source (usts 8194 @bombers finance LP for Me tatoxent toot:Anis au ast vA1 ty 00 3596 YAM the tortsiststpuna cots EISAAhAlt any: A ftAftlICEI.C20,FAMSEPSLTSCAVAHRIAMOASPEPVAROSSSA(Sal2EALSA(17W72W and SPX EFTA01097785 13 January 2015 HY Corporate Credit Energy 'Figure 112: Magnum Hunter Resources Financial Summary Ma/ sou sl.4 44114941144443010 4004440031144 1144) 4414 <Oa tiflaMOIM 01 CO 111 10 11040 12 In al 70 PA ...... Pan Cia.Nal. • Ca. Mariam : 41• 44 I: .2 7. .2 -gs 4 qx 44•4 as I • - 74 In .zantou 4. —4. 14 4 42 is IR WA to a a a It, pat8 0* • 11 014 li 41 44 .4 A 1/ II AT 4444 1* .* or ula coot...sta.. 01 • 61 4 in 4 4444 a II A 44 0 paiTheoaaa.: 011. IA 160 TA OM , r..... h. h„...., Oa la in . Me 14 Ph all 646 -100310114444 In 444 144 II . 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It It 11 410 41 1As 14 34 14 443444114. IA 94 14a •14 IS It At It - 40 0 414 44 444 la 424 474 4 4.1 40 34* he weal:011144a 41 44 III 414 444 444 41.14 it •004 7.4..1.41.4_44111 MN III* Pin 114/4 043 PM Inn suit PIM >cam Nakao a......a a5.1 44 4414 11414 II/11 an pia 14101 WS 4114 LIV 4414 446444444444 4041 044014 440 nn 4440044 114 Ill I Tr I fa IA II 7.0 41.• 1.4 A 444 canto ••• 114 10 4 ba I4 IA 4(41 4* u 441 7.74 A 33 41 44 174 wart...memo 434 7.S• a 414 114 =:=35: :r sar.17.... .r.... . =f 1 ..„,...v 0.40444004 <14/ "L P "*='!" -ar . 444a 40444 a 101. Zia 1.711 4.1! • C. 27 win Wei men * '.". r <'a 4104441w. 444 32/44 4/44 144 4441•4 14040•14•4 40141.4444441 34 III .44'44 44 4.14- 3.44 l4 04% 114 in 144 44/4 C. 404 I4 10 1444.4004/ 1/ 11 IS 4410464.04444 4411 111 IN 44446444 444 41 ON% >bw IT 414 OA 0644 410 414 O 444 444444 OA PI 1414 a 334 444144 04•44 /a MS OT Icar Pam.. Ye MI BS FYN Amin. Orel .141 14•410•441444-44i 44 1•00.1.1... ?vino...am tan 414 OunCaul•I 14•110444 4444444444 444 t. vas Gto a.. tans (44144444 as Cs 339 4444144 00, II1 444401141404 404 46 away 044444444 is hviiek• 1.1.0"...130014 ,•{05.10011SAIINIS Pra oven., Vara "so...ma infrova. W Pal rt as a Mu ea. en nee a. m. SOYA. I:WAWA. &WA Compeer elto) Page 132 Deutsche Bank Securities Inc. EFTA01097786 Magnum Hunter Resources Sensitivity Based on Bloomberg Consensus Deutsche Bank Securities Inc. Figure 113: Commodity Price Scenario Analysis: M FY 15E.E8ITIM (S Biillionl FY ISE FG1i$ lAtIlton 925.113 Gas :3 rr≤fei NYSILY. Gas ≤ ≤≤)121 11.75 12.25 1275 13.25 13.18 $425 14.15 $1.75 $225 1275 13.25 13.25 $4.29 54.71 $30.0 ($71 210 127 543 $4.0 577 193 PO. (54101 ($396) 12382) 1536 (23531 (4339) 43/51 1400 115 131 $48 565 $82 me 1115 MO (6386) 43721 ORR 4314 03301 8916) (1301) $500 153 $71) $55 $103 $120 1137 150.0 MIR (6UI) (1131) 12320 ($3061 C5292) ($27S) 180.0 166 173 $91 $1041 $125 514l 1116 0 $120.0 113391 (1321) 1$311) 10.6 S12021 CRUD ($251) 170.0 579 196 $113 1130 $146 $163 1180 170.0 ($3181 ($30) 111290) 11226 02521 OUP 11233 $80.0 $39 1116 1133 5149 $166 $183 2199 $80.0 ($3021 (1288) 12274) 3260 02151 42221 IS2M San $119 1135 1153 1169 $156 1293 1219 120.0 ($2011 (12711 1121?) 4213 (091 ( 2I5) 4201) FY ISE [BIT DA 11.112)69 FY 16E FCF i5. IAlllio0'. 9.0.ILY. Gas m:121 NYVILX Gas 2 m:121 11.11 123$ $275 10.36 $3.15 1421 $4.16 $I.7$ $338 $2.75 $9.26 $3.7$ $425 70 13943 4291 1151 $17 $39 $51 RH $105 1304 MOH 4300) inn) al (12071 155276) (1256) $40.0 )181 116 539 $51 $53 $105 1127 MO 224601 (13ap) 434) $29 02751 ($251) ($233) 150.0 SIC 132 140 582 1105 $127 2149 $50.0 t13381 ($3171 42911 S275 9$2541 ($233) (2212) 1400 137 $60 Pa 1101 1126 $148 1171 MO ($3171 02961 12275) LTA (U921 02111 12190) 1704 659 1911 $ICO 5128 $146 5170 1192 110.0 112951 (2274) (1254) 1532 (UM ($103) ($199) WOO $50 $102 $121 $146 $169 $193 3213 $90.0 MN 4254) ($233) $211 01901 (5169) alio $800 1103 $122 1145 1167 $189 1211 1220 $90.0 ($254) 0233/ 12212) 2191 01701 41/191 (1123) FY 15E 1171 lever2ge FY 15E Debt Proved Reserve: /3 LIcrel NYME X Gas Umcle) 11.75 SUS SiX 13.25 13.75 5435 84.15 $225 $275 25 13.75 $4.15 SUS $30.0 22954 156.9a 57.8) 35.12 25.12 1952 15.82 $300 529 129 $29 $29 52.9 $2.9 12.9 $40.0 10144 466. 31.42 2314 1124 1492 12.6. $400 12.9 529 529 529 $2.9 12.9 $2.9 $50.0 41.74 2193. 21.32 1369 14.14 120. 10.6. 5500 12.9 12.9 529 529 ne 12.9 $2.9 NOS 2874 19.112 113.04 13.44 115* 10.02 8244 0 00.0 12.9 22.9 529 529 $2.9 $2.9 $2.9 179.0 185.2 15.12 12.7. ilk 94:. 126.2 7.7a 170.0 12.9 22.9 529 529 $2.9 $2.9 $2.9 SA 14.64 12.4a 10.72 9.4. 11214 7.5x 6.82 1000 12.9 22.9 529 529 $2.9 $2.9 $2.9 $800 1202 1042 922 6.2. 7 42 674 612 1800 12.9 029 529 529 $2 t9 $2.9 $29 FY 16E Net Leverage FY 16E Debt.Proved Reserves (GMCle) NYNEX Gas IS metal MIX% Gas 'Sync's) $1.75 $2.25 $275 $125 13.11 N.21 $4.2$ $1.73 221 1275 33.23 /3.71 3423 ]5 190.0 •7322 •361.62 11274 4612 302* 217a 168a 230.0 53 0 130 530 130 $30 $3.0 130 Cirri= MO 34122 116.2a 48.6. 3032 2134 118a 13.6a 140.0 $3.0 130 $30 230 53.0 23.0 230 $50.0 12011s 49.12 30.4* 21.14, 18.84 138a 11.3a 1910 $3.0 130 $30 $3.0 110 $3.0 130 $00.0 49.64 30.62 21.62 14112 131* 11 32 962 $60.0 $3.0 $3.0 $3.0 $30 $30 $3.0 $3.0 1/0.0 92.34 21.92 16.1) 1389 111* 96x 632 1700 $3.0 $3.0 $3.0 $30 $30 13.0 $3.0 180.0 22.34 17.14 13.72 11.44 9.74 844 712 in 183.0 53.0 $3.0 $3.0 230 230 $3.0 130 190.0 17.34 13.94 11.S2 9.84 8.44 7.44 6.52 1910 53.0 $3.0 $3.0 230 230 $3.0 130 Saavoe Oa x54 p Arleta, LP for Me Ubveng CIXPOILIPAS ANCedby D8 MO ACC( It* &YAWS XP w4* lots &00,W9 coniersta 411/0•Itt.014K AMFPBM88CEao,FANOIPELTSCA(lAYAMPO.OASPEPVAROSESA(SEVGEAL SA(TALMIEW&SHP% EFTA01097787 13 January 2015 HY Corporate Credit Energy 'Figure 114: Midstates Petroleum Financial Summary MaliEMMMENIIIMMIIMMEMICIMMIEEMIMEM 1=====Eil 1.6****.66 ,66•1*****6 ._. now* nr .7.44 )616* 43 4: 4: if Pa 0 si If) .....4.3mappon 4434 0 Oil 10 1 0 MI WI 01 00 lawns** III 110 01 110 In * IP W O 47 11 ZI In 0 W SP a, *4 to a W II A 04 01 n 3% 5 17 11 • ...inn 7 a 14 n 0 1 0 S 4P A If heel IP P11 0 40 1••• Sarb O 0 1 I '3 It *Raw 0.4 Po 0 A 0441 I 410 •••• 0.10 0 0 n I 113 11 IN 11411 Wm* 014 I* 77 gni 11 (1% 00 IP COMM manOon A 110 W 40 Cl at M PT TWWWW44•401••••• W 04 4111 04 10 ID *I OF/W*4 Ilan IMP PAM WOM WA Wll 11 .11 W II In owl.. an SAW IMO WS Mn 1444 WC 1431 MN NM LW 1.40.4WCW 4.0.'.4.41414. OW is WA 44.11 WO MK *II 4011 IOW owe WCW.30./1 UR MM 1414 OM WI 1110 MP 1011 . 4 •• CT anew 41w. I.IA Wn 1M) 147/4 1.111 1010 7314 u 010* 11.0i MK IOW VOA W.M WA IWO WO/ 7014 *1 mown A0.0,Wp AI PR Pi C4 MM 2101 CO (IT wen Nit nn. M 0177 3414 inn WM am 1110 PI* 3414 WI (0 µNon i1/4 4.4.4..ral WU 47)14 .11441 47U1 11147 PM API 54147 SISK W I 14.33 VTR PP an On 111.41 PIM nn cas µNon i1/4 4.4.4.4.44 WO 1W 5410 14:4 MO il PI 2717 301 4.111 WO 1034 10.14 WM 11111 let* Pan 11,411 14&7! • Omen* W04 in NI• as SON an OOP an an PM PIM • N Com 41.0 On II TI PR I'S 410 II es RN 11 SW an UP 411 1440 1471 Mn WO 11* OP 00 PP 1427 PM PP 051 MP 052 P. 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Da stk. 04 in n 60 on 1011 We MA •6116 666.4•1***0 Po CO a 444 Pi OWN* bb 00 1 la 010 NO OW nu -I ON PH Con /Ivo .01•••141•9 (VII 11 FAO 1141 00 WI Mow a 14 / 0 33 (.6•066.• • 401 401 >14 DO 101 124 14 666** 4 *Iv 1114 • IRO • 110) WS) PO ISO 66 6* 661 1.04 1A1 1W 7104 1/0 in 0 4 .10.ne *Wm Asa Ow. P 44.441. 004• 40410. 4 WC in 711. ION IP% II% 04. 174 104. 04. I. ea• SW 00t nr. lin 111. Irn 04 111. INN IP 6.11544400 QO II. Ib IN Ill 1664*1119* •A I 0. 0.- OM IA )0 , 66 T0 n 414 TA 114 ,t, 0**0"06 , 57y 44 16 1.I. fN 04466•046666166 a. I1131. 10.3 0314 W0 1047 • IWO t6**6•16•101)0•60 46* Pin PAT) 10143 Inn • lard Ca* CertertPm/6T n C*666 Www MN ppm* • 11 •••• 06** 616:6•6* pi• Am* c64), 0404444$0.444 la 6.66)***ortne 6.464,601 It I 4* an In 14 166.60,6•661. CO* 5•41.0 ,00 WOW 040 WSW* WI 663. 46.6.66666.6 II SIM MOS 14441nwennti 060666•06661.6664.6.1* 1040 47.114 WOW 44.4www.A.44.4www04444 mom nave Na. ant are new 111% 6*•**111.666 IMINE 01 »I 6666.66 Ma!).**. 74 10 11•003 OW bow. 140 AM 111 1041•03.44 4444 an 1110. POP NM P. 10.4.4500 On 410% 7114 34 NW *WW1 rt) WI OW 114. WOW 114▪ 3 ilmniwnia Won Mw CR tftwiennem 11441043 100 lin 04•4•11100114 10 NA *a 014. IA* Sarni Dana* Sara Conway crua Page 134 Deutsche Bank Securities Inc. EFTA01097788 Figure 115: Commodity Price Scenario Analysis: Midstates Petroleum Sensitivity Based on Bloomberg Consensus 3 -‹ NYMLX Gas's 1.16 UM FY 15E EISITOA (S. Million) 1275 $3.25 53.75 14.25 5475 NfMLY.G.as $1.15 $225 FY 15E FCF($ 1275 minion) $3.25 SOS 5675 412 "65. O $4 13.75 130.0 $165 $173 $181 $190 3(99 $2.06 $214 $30.0 (S4161 ($408) 1$4301 4393j (53851 43771 15370) a -z $40.0 $210 1218 1227 $235 1243 $252 $260 $40.0 ($3741 ($3671 4359) 153511 ($3441 ($3336) IWO a7 150 0 $255 5264 5272 SRO 5209 $29? $395 $500 03331 (5325) 43114 43101 ($302) (5295) 11247) n En 560.0 $301 $3/9 $31? ECG $334 $342 $351 160.0 42911 (5284) 1$276) 152661 POD (5253) 11246) $70.0 5346 5356 5363 $371 $379 1388 13% 570.0 ($250) ($242) (5235) 112271 (62201 (5212) (520/) $(40.0 5392 $.403 5403 14•7 1425 $433 5441 19000 42091 4200 (5193) 151881 (11761 (5170/ RUG) ROO 1437 $445 $454 $467 $470 4479 5487 $900 (Sin (5160, 'sus, 41441 41315 ($599) ($121) FY 16E EBITOA (S. FY 16E FCF (S NOOLX Gas ,S mal MM.7L Gas 01)5)5 $2.23 12.75 S520 83.71 $4 26 5575 51.75 523$ $275 53.20 53.75 Mal 1675 $304 $82 $91 $101 INT $129 5143 $152 53, 0 153331 (5322., (5311) 113001 (12891 (5277) (1266) $40.0 $13$ $150 $152 $123 $185 $197 1.2641 $40.0 02791 (tat) 11256) 62061 027441 (5223) 1$21b $50.0 $195 5206 $218 $230 $241 5253 5265 550.0 (52241 02131 1202) 151911 011801 (5109) 11157) MO 5251 5262 $274 $286 $297 $309 $321 C $800 (51701 ($1591 1147) 95138( 019251 ($114) 1103) 5704 $307 5919 UR 042 $354 $365 $377 0234 (51151 (5104) 493) 15827 (1711 C6601 IS•91 580.0 $363 5325 $336 $394 $410 $121 WO $80.0 CAD MO) ION 1127) (5161 ON $6 190.0 1419 $431 $443 $454 5466 $478 $489 $80.0 (561 5$ $16 327 538 549 580 FY 15E Nel leverage FY 15E Debt Proved Reserver. (5 91)1.9 NYMF' NYME X Gas (5.mcle) 51.75 12.25 Si $3.25 13.75 1435 $4.75 $225 1225 53.25 $3.75 $4.15 54.75 $30.0 1294 122* is& Isla 1064 1914 974 $300 $2.8 92 4 $2 8 127 $27 12.7 5.2.7 $40.0 9114 96* 414 0.* 044 6 Ix 704 $0,0 $4.7 $27 $2 7 $2 3 527 12.7 127 $10.0 0* 774 7.44 7.74 7.0s 624 684 $500 2.7 127 $26 $26 126 52.6 526 $80.0 854 6.44 434 8.11 5.% Slx 564 560.0 52.6 5.25 126 126 32.6 52.6 $26 $70.0 5.7x 554 5.44 5.24 5.14 50(4 484 170.0 52.6 12.6 125 125 25 52.5 52.5 580.0 451( 4.84 47* 4.54 4.44 434 424 5800 52.5 525 525 525 25 52.5 52.1 $904 434 424 41x 40. 3* 364 304 $$900 52 5 $24 $24 $24 24 24 24 FY 16E Net Leverage FY 16E Debt.PrOved Reserves (5 Mere) NW EX G.15 lsmclel NYNEX Gas (Serncle) 51.7$ 3215 $275 53.25 13.15 14.25 54.7$ 7$ 221. $225 2.25 53.75 $425 20 7E $30.0 79194 96.0. 22.9. 20.54 10.54 1604 1544 530.0 50.2 $32 $32 $31 $1.1 $0.1 $31 WS 17 17 15.64 14.4 13.1, 124x 1154 10.84 540.0 $3.1 53.1 53.0 510 53.0 1.3.0 52.9 1500 116* 1044 10.24 9.51g 9.14 867 8,14 5500 53.0 521 329 529 529 52.6 528 MO 071 524 7.04 7.4 7.04 674 64* 5600 52.8 RS $28 528 32.7 52.7 62.7 5700 68* 66* 62* 114. 6.74 5.44 6.74 5700 52.7 $2.7 $27 126 32.6 52.6 52.6 $80.0 Sax 52* 5.04 4.8a (1.44 45x 43* = 1.90.0 52.6 528 825 825 525 52.5 52.1 $90.0 457 43* 42* 4.4. 3.% 174 354 5900 52.5 52.4 52.4 824 32.4 52.3 523 San Deutsche*** Obombeg fOunar LP for Mr toCatingcompaner nal<meat by WOO lkitt ENO (omen Agteeneetta Obantberp consents, cameos a* AMPERAMCELCCOFANG.MLTSCP4MNICAIPO.OASPEWAROSESIZSEVOMSKIPLMILWend WM( -o EFTA01097789 13 January 2015 HY Corporate Credit Energy 'Figure 116: Oasis Petroleum Financial Summary MN 1411$ 11042412 IC COI MC MO 13148 4144.440120.0413 6024424.12.4441 I 14 If Ir1L.lf 0303 0%408.110.''104040M@ 6024424.12.4441 14.31 14.0.10 [421 O00%9. 1.2.24.22.0Nibs Oa ZOZ 6024424.12.4441 1140 22 IN141/ 1:444 t en%P.Veawtln cla ZCZ1 0250/4210.4442 1.1...423 it 41 / 1444 Xs 94 34 74 J:0 1142 332 al 307 313 303 330 m 143 01 110 Ile 337 //0 101 04 41 307 II) .14 ILI 23 341 Ill ZO SOO a 4.2 23 a A 101 220 CI V 0$ Al ffi 310 OA 01 VIA 1714 all ro 211 011 air 44004.<.4 42321. n. a 404 Ine IM 2410,4240.2 4$: 146 341 /44 al Si 41 /414 ST Cone 01444 n423 4,42 10LI 14 X. 92.10 RIG MAO 0703 Asa x133.0 204 Cu 320 445 320 4.24 471 244 3.00 141.24442 Conon Nistil Gan pO0.4144.4.01 3.247 1448 11121 MO? 4.320 0131 1.117 4bn nba.ro Gm 44 fled. 2.03 104 0.34 714 6.27 7.4 2 412 Calla% a /414711414 1712 3.44 1443 2111 2703 142.0 2723 743 2144•2014.144 Mm 411 21.4 422 WIN 014 Conon N174. 4.23.0.• Mon .21.04.22432 rya fittA • . • . . • • . TRW Erni. 4.23.4412.444 IRMO 7220 rani COQ MANI ILO 4.02 4434 14 241 I pid Era 12. 01022,0112.2,16, IPA l$ KM 1434 1211 Ian IAA 134 1442 Tin bia.44.44.4444.1P24. 1443 3.014 347 2014 4123 Zan 204 CM 31371 1.0124AVVIECI•6061tita I 0110 SO0 MC bin ISM 4175 10.4) 01.11 KM Rwona• • Op/4N 444 web. 12.4..., *IS& SU MAC WM OTOS 1•270 4143 34111 MU 4th C.442. 1010 $1143 $1014 $2004 $204.4 POO 4134 1444 117.40 04.4 UM 0732 1410 25.23 $44 $4.1 1114 44 1403 L‘NSA 41251 Inn MOO t2441 12034. Mit 1.1310 4.114 INV 00.44 Kyr* 444.40 ONLY 52 4 MAO 1420 IMO 123230 23411 all 1111 31 $1411 1441 $004 VW PP Ian WS /yY 'in OOP at loon. 01410 UM 10/040 21000 0010 IMO) 4311 1144 020.01 I ran fern at 21444. 010.00 4244 $13.44 OIN /4 41.02 3204 077 4 1320 OIN /4 242•2441401 415 IIOY a47 14424 10040 4440 414 7141 Onn In 24 .334 MI MO NO 31) 44 Oa 4 01 III 3 I. 01 Ir 1220 MS MO 0 30 InO 0.141 0 431 04 3I (00 00 0 14 7 13 00 I Pt 41 In 240 07, inn on, MIT 0001 oil II 31 33 14 33 III 14 4 14 00 OR PO 00 Ina 070 14301 Ilin1 000 ilaZ ci3a11 322 03 olo 0.141 4w PA 04 11 24 MO 1304 040 144 ea ilOor 11.414•44 /nen 00 10 II 01 OP In rII 4 811 Va.... 4 ON. 2201 LW) 224 3117 0241 001 140 114$ Coax /Now 4.2 OI AO 14 In NN.23 Too. (Nu Y42 4.44 440 bona Gown 00444 044414 2.240 Cart 27% 471 33% 0% la% 33% 141. 140 felt.. Caron 13% 2.1% 4% 41% 33% 44% I00% 110% 1.111044314•44 1114102.1.0414.4 W.6410444.41 0I. St Ill 14 elk 00 1244 Lb no ft 5.444 44/114. 014 002 111 411 Lk Lis 0.2 24400DM 344 834 10 324 17. 314 242 2I. 44101704 I74 lb 10 324 lit .34 142 30 040N4.4 %neon 101444 40 40 $1111 ION 11001 41.15 4I,4 bo lo 433 111,10 344Coo.1134.444 .2444 $334 Ill n It On 114.43 $345 VOA $1133 11723 221740 2424.4.2 044404409 14 new 0400011.44 00.4 4444 00.4.44 Mcon*, • vo. he. we. 4%44.2.4, 444nwr, al 44.3444 lie psia4240.22024107 2142.444104 of .114. 'I.i..1 4424.4 br•13. Owe gyne.....142•0444.71, 4.4.12.124to Cote L.4442 aeon q.441 4. Colon+ X% 3042%s 14222341%444. an 4713% 0142340144 44 441 414%BV.44.I%n.m NV 414%. VO•oasiono NZ 7411044 1.2 4144• 102. • ON,04,4014 4.2•242.40•21 La an bteprnevske Cl 40104 0.44.21100414 conk, n 024,c424.0004210 an" 07 MIMI 4404/memo 44 &bans &ince! Oevescia ant tongs., y Oars Page 136 Deutsche Bank Securities Inc. EFTA01097790 Figure 117: Commodity Price Scenario Analysis: Oasis Petroleum Sensitivity Based on Bloomberg Consensus m FY 15€ EEDTDA (S Mahon) FY 15E FCF minion) P C tn1LX. Gas li nIL.T.. Gas's 71:1c1 $30.0 11.7$ $288 $2.25 1272 $3.25 13.75 3135 µ3S $1.75 $225 1275 $3.25 13.75 µ2S µ75 B oa $656 $µ3 $671 1678 $486 1811 130.0 ($182) ($1771 (1171) 131µI ($1131 ($153) 11147) $40.0 2691 1899 $707 $714 1722 2730 $737 $80.0 ($1531 11)49) 11140 31381 ($021 11126) 11120) a; 8 2200 VIGO $735 $779 $743 $7µ $710 $791 $718 $902 $766 9)29 2773 Nu $761 ties 150.0 ($1261 ($122) ($117) 151111 01051 0801 t$83) a in Sµ0 ($1011 1$85) 1$901 IS) (MI ($721 Oµ7 $709 $822 2830 2838 SIG $853 1261 $868 370.0 ($74) 11µ) 062) 1557) 0511 (1451 1139) 280.0 $886 $874 MI $889 1897 2804 2912 $80.0 ($471 MAI) .13S) 330) (324' ($181 ISI2) $90.0 $917 $924 $922 $940 $947 $955 $(20 MA ($151 MI l$3. $3 se $14 $20 FY 16E EMMA '5 Million, FY 16E FCF IS 1/1,11i0:1 2....ILY.“55 N \ILA u.r. tacl 11.7$ $212 $275 1120 2172 $4.22 $4.75 $1.71 1221 MTh 13,20 $ITS $4.21 $4.70 $30.0 $140 $147 SI% $163 2170 2178 $10.0 (23•71 (1332 ($331) 12241 (93161 (3308) ($301) $400 2269 $276 $284 $292 2299 2307 $315 400 ($2321 (0224) ($216) 32001 02011 ($193) 0180 $10.0 5393 $4% SAO $421 $429 $436 $444 350.0 ($1171 ($1091 0102) 1394) (1851 ($791 WI) $640 1527 2535 $543 $550 WA MS 1173 MA 1121 86 213 321 329 136 $44 2700 $656 $664 $672 $679 $287 2495 $702 MO 213 $129 $120 $136 $143 2151 $159 $80.0 $765 $710 $801 W. 9516 2624 $1131 3M0 UM $233 $243 $211 1258 32313 $274 190.0 $615 2922 $930 $937 $945 $953 $910 03.0 $344 $352 $360 1357 $375 $383 $393 FY 15E Nel Leverage FY 15E Debt Proved Reserve.: .5 I.IcreI NYME X Gas (Sande) 11.32 $2.12 3275 $3.25 2315 1226 $4.75 2225 3275 3125 23.75 µ2S µ75 $30.0 4Ax 4.35 4.34 42. 42. 4 ix 4.0x $300 $2.1 $2.1 $21 $21 $I. $2.1 12.1 pop 4.1x 4.0x 4.05 3.9. 3$r 36* 3 ex $400 32.1 32.1 $21 321 52.0 2.0 $2.0 $504 3.8x 274 3,75 3.7. 36x 36x 30. 350.0 32.0 62.0 $20 120 32.0 32.0 $2.0 $500 35x 3.2. 3.55 32. 3.4x 13x 335 $50.0 12.0 1.2.0 32.0 320 $20 32.0 12.0 0 $700 33x 336 3.3.. 3.2. 32. 3.1x 115 370.0 12.0 1.2.0 320 320 $20 32.0 $20 $1104 3.1x 3.15 115 3.0. 312 301 29x $800 22.0 $20 120 $20 $20 $2.0 $20 1900 29x 295 2.95 2.6. 26x 28x 22. $800 32.0 $2.0 $20 $I 9 $1.9 $1.9 $1.9 FY 16E Net Leverage FY 16E Debt Proved Reserves (S hick/ NW EX Gas IS. mele/ 1.11111EX Gas 06ncre) $1.71 $2.25 $275 025 53,75 s4.21 $4.75 $1.75 2 25 $0.75 54,25 $4.71 $90.0 222* 21.0 20.3. 192. 18 h 174. 16.6. 190.0 . $23 $23 $23 $2.3 $2.3 $2.3 $40.0 11.2. 109x 10.2 1024 9.94 9.6x 9.4x $40.0 32.2 $22 122 $22 122 32.2 122 $600 724 7.1x 695 614 64). 6Sx 2.3x 3500 321 12.1 121 321 $2.1 $2.1 $2.1 C 1020 62* Si. 504 4.9x 4.2/14 47x 46. $600 $2.0 $20 $20 $20 32.0 2.0 $1.9 $700 40x 39* 31x 3.1. 3.h 3.6x 3 ex $700 $1.9 31.9 $1.9 $1.9 349 $1.9 Ph $80.0 3.1* 11* 10* 3.0. 2.2. 29x 29x = $80.0 SIC $113 214 $18 $1.8 $1.8 $1.7 $90.0 22x 255 25* 2A 2.4). 2.4x 235 380.0 51,7 31.7 $1.7 $1.7 357 $1.6 $IE Soutar Davao* Sank 6brcr0e•O fovea,LP Ice me bro.m0 *nines normeal byte MO nett me Iowan Spires nyffea lthantorg cannonss eases anitv AteifitAkilaIXXOFANG.S.ELTSVCOAYRUPO.OASPEWAROSE.SP4SIVCEN.SAtIratIZWorKI frVPX EFTA01097791 13 January 2015 HY Corporate Credit Energy 'Figure 118: Parsley Energy Financial Summary On Mgr Cal CCC-1443 16 Cc 22 • c 3011. 10532 111 Ill Raffle* es an a 121 linumf 1.2310040 1l000 . Cal1 M. 14:41344 Mt kw,* a a 62 64 263 a 121 0431) Cab 13 IS a v a a acres 11,41,4Can • tical IN al ry 41) Elea 1411 11400411 a DOA 10 It 20 20 I. 6 a ml 120011 6 so 10 82 Id EST 010 arc 004n 4 ea 04) 6 2 4 Or. an an, a II) 0 2 a fl 23 Tea 2 9 12 1101110•124, I 43 27 a 26 LM C11110211 Is in 14.0./ NA 75 101 147 In lir 21 Ti LTV 0130,il 4333 Nara • 110 111 la Ip 27 0$ 1101 Ct.* Mu" SIM if $0741 114293 *2722 10112 104 le al 07 1410 Name' 4.25:404t, use HAS 32 72 SIM 13 432 1232 5371 larrreadia 0741C.. Pittuaren afra, Hit 1,412 1914 2203 100 ass 4103 Anatol MS 03a P.a. ballaa 1614 1531 SIM bb 1397 471 1476 11% Cu* Cl 1104. -40 4004 322 323 3 2101 mm IOC 11441eM ai ?maga 40210 11513 934 24 Van $4 12 1201 FON ar DI WA Nagar Mti00 NA IM 283 103 IH Pats. NO. P.C. ISOM 12121 mm 10211144•4a PrO3044 000 142 1274 3410 4070 Ira 134161.110111•44101111441 14631 Pa 0K13) Mob NA IS) 97 MO) 264• 22 Opnling lalerdlns mtge. 2.4114421 put SIM 11174 lab ULU -n plm 1.41.0 Con sun 11210 ill= HI30 31110 ms pita "A 116.1 pp Mal 1766 Hp as 34 01 306* ITN 12226 /WAS 11146 11613 /IOM 11599 acraiNaccee PIA la .74 12405 $171,5 IT II ;ars VII pa 2371 a 10 1716 /IOM 1142 1rac 0•44, III 42 Ilia /11 42 Ills PIA 11142 Spirt at (ammo) NA MON 12434 $1024 51034 PIA 11014 IV warn% ta 12132 a Iva Iflp 6010 rasa* noon CE4101160114tati S en a Comp Ica 7— Cops IA W 00 Om1 IMO 017) alt) 014/0/ 1101.40,09241441 44 14 4 13 321 221 Ca) Av44001, 0(48x.4) IW PC all 12121 43/ larerNal CopI•ArosItnei PI II 10 hie cas Eke IN 10) 4031 all 001) airy 7223 Pal Daral Ail cla 44 Anti MI 3 71 a CI 022) Ina Cm/. Ma Ind Pea SawIedadosen Oaf 017) Oa MI 0071 PTO &aft Pal Da Cu,. IS 2 534 133 133 12 a • Cne re... NA IM 12 235 • 5.033 arca 011,0 PA Ill Ca 591 557 513 Im imp Ton 040 NIL 634 Ml 667 yelartnaarisia Anne 0:nn , k< 40.110.62011303,13 NA NA 260% 1014 NA Prorrar Gown NA NA RA KG% NA LM Conn Swages E0T0L\C/200.0' v(1 C•04310,01n0,0 122( NA 7.11 64 re atlIZIOAX ON 0114 It 13/44191104.4 IN IM SI) 24 Oro 34 Mn 010 20120% 122( 141 611 rib 244 LC 13041111..4 /kw.. Ira., NA 72 110.12 11017 11012 7317' 46 'N NA 122% /231. 16. (4, CMOS" 004012900 Puff) OM, .1 .ry.0O nn en) da, eglenia, an: 914.220% 07112I<.4 203 len P0, Car aUaaanta. aa“.. " PC Panaccal %acts n awns, • • 140.51120 » Il OZ la PE Pal IVA an Alta n3C.f3I Pao, 121 n lab.a. Canaan 13 Paul P Mac Nadal rail IS lci•Sttaa am Ora lea nos. .1)01v St A.nos*en P010 P 13/41101M4441 23 410 229/519E(0-001010 ens Mat Pan o aml0.` ta %an 22% NI= 141197.01013011140 43% Ao4 La 06311 12 It 2001 2 1:14914411%1Trall PI Ina 1910 Loral 0•44 2 Mora Pciamen O0 1140% Pa ul 594606811.04 04 2022 132 TOW Dal 163 la 500.0 1109 an 731 al Oat 126 15411411)1Mtral tan 262 1141404* -Vas i515 Cana • Isa 2014e 213% 1308 • 1237 Nei 001011110/41. 24 2211E 1404 11.04 -1961 0/01.201041341ndel mesa .as M natairs• days! 02022•Wtelli/Jata cacao. attrataltenlWargaateir AravACLI 214 0 14 14 245 0 SAOCe' DflarleA0 BMA COSH 4403 Page 138 Deutsche Bank Securities Inc. EFTA01097792 Figure 119: Commodity Price Scenario Analysis: Parsely Energy Sensitivity Based on Bloombe-r; Co M _g LO 0 R C FY 15E 6131TOA I$ Miillion) FY 15E FCF (S Million) NYMLX Gas ' NYME X Gas ISYncle) 11.12 $2.75 1275 $3.25 13.75 24.25 54.75 $1.75 5275 53.25 $3.75 PM $4.75 2 $30.0 $103 $107 $112 $117 $122 $126 $131 $30.0 02291 (2220 11223) 122191 (2216p (5213) 11210 $40.0 $150 $155 $159 $164 $169 $174 $178 $0.0 ($1971 ($194) 1191) 31871 0 101 ($181) WM a_a N8 2200 $197 $202 $207 $211 $216 2221 $226 $500 ($1651 ($182) 15138) 151161 0 1821 0149) 15146) a $60.0 $244 $249 $254 $259 $283 $225 $223 00.0 01131 0130) 1512$) 01231 01201 CSI I7) 15113) $70.0 $272 $277 1222 $284 $291 5296 2301 $70.0 01151 ($111) 15100 151051 (21021 (MN 110$) $90.0 $295 $299 $334 IXO 2314 4318 $323 Selo (8891 1396) 12921 1589) (5081 (3831 1180) $90.0 $325 $33) $30 2.09 2344 $349 WM $10.0 ($751 ISM) 1$71) ISO) (WI 0821 156$) FY 16E EF3ITOA IS Million) FY 16E FCF iS Mild» hiSILY. Gas :2 ir:fel 54 2\X). mCfc. I $1.71 $3.22 $275 1:225 13.7$ $425 $4.75 $1.75 $325 2275 $1325 23.71 1425 75 530-0 510$ $113 $118 $123 $127 $132 $137 $300 0 1571 016E 0 178) 151731 0 1551 ($ O) 15159) $40.0 $156 00) $10 SIM $175 $179 $led 03.0 ($10) ($135) 15130 1$1281 0 1211 ($116) 0111) $50.0 $203 PM $212 $217 $222 5227 1231 $50.0 (MI (288) 103) 1$78) 0741 0591 100 2800 $250 $255 $220 $264 $269 2274 2278 MA (1A51 1241) 1135) ISM) 0261 0221 $17) $70.0 $258 1293 $298 $320 $357 $312 $317 $70.0 ($131 1021 153) $2 56 SI 1 $16 $90.0 $303 $335 $313 2.312 $322 $327 $332 $0.0 29 $14 $19 $23 $25 $33 $38 2600 $332 $337 $342 1342 2351 5356 $361 $90.0 $40 544 $49 SSA $59 $63 268 FY ME Nel leverage FY 15E Debt PlOved Reserves IS Rick) NYMFX NYSIEX Gas (dmcle) 11.75 $2.25 $275 53.25 $3.75 035 $4.75 51.7$ 522$ 3275 5325 23.75 $4.75 $4.75 2.30.0 7.7x 73. 7.0. 6.7. 6.4 du 59. $300 S2f 524 024 $24 $2.4 22.4 $2.4 $400 5.1x 49. 4.7. 40 4.4x 43x 42. $400 $2.3 $23 $23 $23 n3 523 $23 004 3,7x 35. 3.21. 3.4. 3.3c 32x 31x $500 $2.2 $22 $22 $22 $22 $2.2 $22 5660 2.3x 28x 27x 2.7. 2.68 25x 25x $60.0 52.1 $2.1 $21 12-1 $21 $2.1 $2.1 $70.0 25x 24x 244 2.3. 2.1. 221 22x $70.0 S2.1 $2.1 $20 220 $20 $2.0 $20 $004 221 22x 22:it 2.1. 2 Ix 201 210 $800 43.0 $20 $20 220 $20 $2.0 $20 $900 204 19. aft 1.9. 1$x 18x 15. $900 $29 $19 $19 0 9 $1.9 $1.9 $1.9 FY 16E Net Leverage FY 16E Debt.Proved Reserves IS hick) NYSIEX Gas 0 mc10) NYNEX Gas ISYncle1 $1.75 $2.2$ $2 $3.25 142$ $4 75 7$ 22$ $ 25 $1.11 $4.25 $4.71 $30.0 9 Ox 80 8.2* 210 71x 68. S30_0 53.0 $3 0 $29 229 22.9 $2.9 $28 $0.0 50 55. 5.34 5.1. 4.8x 4 fix 5400 $2.7 $2.7 $27 $27 $26 22.6 22.2 2504 41:4 39. 3.80 3.7. 3.4x 33. IMO $2.5 $25 $24 $24 $24 $2.4 123 $00.0 32.. 29x 2.5. 2.7. 26x 210 2S. $030 $2.3 $22 $22 $22 $2.2 52.! 22.1 =I 2830 24x 23. 2.3. 2.2. 2.1x 21x 20 $700 0,1 $2.1 $20 $20 $2.0 $2.0 22.0 580.0 2.1x 21x 204 2.11. 1.0 19x 180 5230 32.0 $20 $1.9 $1.9 $1.9 $1.9 $14 590.0 10 1.8x 1.74 I.7. 16x $90.0 21.9 $id $1.5 $1.8 $1.7 $1.7 $17 Swear Owdo1e Sank Obombeg Ammo LP he U4 41bang convoner nce cow.0by 08 Se6n 1,1412 the bretwts Agaves mem Sbombeig cannon., eanmtes are A ElY1tARSCO.C2.21:1110271C1.122,44411RA4P0.042PEWAROSE.$1421VCSES1t1PailZWorcl WPX -o 8 EFTA01097793 13 January 2015 HY Corporate Credit Energy 'Figure 120: Penn Virgnia Financial Summary 72% Piet Peselnad Wn cla 3410 IIIMPP 0.49.0 °Jul& luc M., raperu.d14.. N X60 Lel 14.0.1.134101 tap", I44.: man. 121 II? 133 IX IU 111 and tne Hap. 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U. .4% as P. in max 31% 13% V% 0% 9% LTNICno.19.4101144 14....4 MP Caul.. Pup. IM .1.34 Mt 434 E. P. PPE0.10.2 01. PM OD • Sn E0,1041 42. 32. 411 I.. Nat DIM 1.1. at. 514 33. 24/ 411 D.t.Pw..341.uemplatat 3413 MW SIPS 31.43 1131 pW SISP Ptehreor30•41,444 Rounr..104.244 LON pu 1143 LIZ 34 14 3.44 06.Preof Amon 44411 SION NT. as 4444 1413 *AO tlesOkneltncryr.04......inlon WS" 1/1 a40 13 IAM IRIS as 0014.66.6 VPOOM =r fraos 1•10410 60....33. pperzn al el NO .1.4. .44.4 1.4no es tats Na../ :Eat 40.121 1.43.an.VAU0 3 lamp OVISI Ixe/aik*I3I••••••••••11 .410•10... 40 NM WEI PoOr.o0•114.....tiptn 4W tom Throtepen tap ..0.3310 . 141 Up.416010 NW ale) tacf.e. torn OP Ara Onus.. 'at at GIS C.Ivelralee.) 113511 131103 IN cvn... 4 ot.CLIII/X.C• Load.. co-tat, 'Or/ I In.03 news P. TO Ws WI NES Pa et SI 364 PA • 03 pact. ...1.113 340.4 al% 40% 116.00•Cufl Fait. 1311 4014! V. "OM IP ;34 04.0611044 ne. .135% snr tliaaaos OW* ea Ma iN ineol owsuni tboan ne. I "CM 'Poo 9.030.143 /40101:327 1 T60 0.141 n el ..— SIM Offibi %Para amnia 01601 Weal 4411 344 Papp Pip 12111 0 Maar Nllf 414 1314 ..1161 In OP141110/12 • Nil* 0% 13 SI .1323 I rv. Inon6 t513,6 IOW rec. Awned I Monant Paeans Scam' Oftexa lank Crain yam Page 140 Deutsche Bank Securities Inc. EFTA01097794 Figure 121: Commodity Price Scenario Analysis: Penn Virginia Sensitivity Based on Bloomberg Consensus FY 15E EDITOR (5 Million) FY 15E FCF (5 MilliOn) 3 n hYMIX. Gas 5 NraLa 11.75 µ35 1275 $3.25 13.75 1425 81.71 $1.75 $225 1175 13.25 $3.75 WS 54.75 '8 $30.0 1627 1633 1640 $646 5552 1659 $666 $30.0 (12441 42401 (1ns) 11231 422M 4222) 11217) $44.0 $642 1448 1655 $661 5667 1674 $680 $40.0 42321 (12271 4223) 11218 <12141 (1209) 1µ0L) a7 $60.0 $657 MO $670 1676 4142 $699 $635 $50.0 4219/ (1215) 4210/ 16206 MOM (11971 1192) n $60.0 $672 $676 $665 Uhl 5687 $704 $710 WO (12071 (5113 1191) 14193 0191 MN) 11/0) $70.0 $687 $693 $780 $706 5712 1719 $725 570.0 (11941 (1190) MS) 15181 11761 (1172) (513 $80.0 $618 $624 1631 5µ7 WM $650 $656 580.0 (12411 (12371 4232) 15228 42241 42191 4215) MA $557 $.5M 150/ $575 5642 $586 $596 MA 42841 (1279( 42751 4271 02661 (52619 4257) FY 16E EDITDA I5 Million) FY 16E FEE is GrSILXbas 5 et LIMLX Gas 'S Tcicl 11.71 $2.25 $275 6120 $3.71 $425 $4.75 $1.71 5229 $275 13(20 53.75 5420 14.75 $30.0 µ06 $212 4220 $127 5234 $240 $247 $30.0 ($274) 1261 1261) 11041 0247i (1240) 1.30) $40.0 $261 12(41 1275 szez 5289 1296 1932 $40.0 (12311 1224) 1213 112111 020/1 ($197) 1111) $50.0 5317 $324 $330 $337 1344 5351 $358 150.0 WW1 ($111 11741 111671 11611 (1151) 1143 MOO 5372 $379 $326 1333 $399 1406 $413 SA (11451 (1138) 4131) 151241 11171 (1111) (51011 $70.0 $427 $434 $441 $448 5453 $461 We $70.9 (11011 Ittee 4141 1111) 1 741 (1.71 161) MA 5423 He) WS $503 $510 $517 $524 MAO (1121 173 401 IWO 1911 1411 191) $90.0 1638 $545 $552 $5541 1665 1672 $579 $90.0 (1611 15/1 11/71 ISIS) 131 1271 1201 FY 15E Nel Leverage FY 15E Debt Proved Reserves {5 Mere) NYMEX Gas 1$Yncle) µ.75 6235 1275 1125 µ.75 MIS IA.75 $22, 13.75 54.79 SUS $260 234 23{. 23{. 2.2. 224 221 2.14 5300 SI 8 518 118 II 8 51.9 11.9 51.7 5204 22x 22x 2.2x 2.24 2.14 2.15 2.14 100 51.0 its 516 $1.7 $1.7 51.7 61.7 $50.0 22x 214 2.14 2.14 2.1x 264 2.94 1500 51.7 11.7 11.7 112 $1.7 51.7 SI.7 $80.0 2.14 2Ix 202{ 2.0. 2414 288 2119{ $60.0 51.7 51.7 51.7 51.7 $47 51.7 51.7 $70.0 264 20x 2.01( 2.0. 124 1.44 191{ 170.0 51.7 51.7 51.7 $1.7 $1.7 51.7 solo 23x 234 234 2.2( 224 221 228 10.0 51.8 SIB 513 513 $1.9 51.7 51.7 $960 27x 264 2.64 2.6x 254 258 25x $40.0 $1 $14 516 510 $1.0 5111 SI FY 16E Net Leverage FY 16E Debt Proved Reserves (S Mere( NYMEX Gas 4. met) NYMEX Gas 11{enele) $1.75 12.21 $2.75 121.25 13.71 $4.25 $4.75 1221 5275 $125 13.75 1.25 1. $30.0 5.5.4 514 7.8. 7.5. 733 684 130.0 2.1 i27 21 21 2.l 521 12 1 0 P MO 65x 634 6.15 5.9. 5.7a 524 160.0 µ.1 µ.1 52.0 µ0 $20 µ.0 µ0 1500 521 5-0.. 4.94 4.704 4E9 45x 4.44 $500 12.0 µ0 52.0 µ0 $1.9 11.9 513 180.0 {42x 41x 4.01{ 3.9x 349 3.74 3.7x 5600 11.9 51.9 31.9 318 $1.9 MI 51.9 1700 3.44 35, 34x 3.3x 324 32x 3.1x 100 11.9 51.9 31.6 31 8 $10 51.2 MS 180.0 324 314 3.1x 3.0.4 224 29“ 284 ≥ IMO 11.9 51.9 51.9 519 $1.8 11.9 51.8 $90.0 29({ 294 284 2.8. 2.7x 2.6.5 264 $90.0 11.9 51.9 51.9 519 $1.9 11.9 51.8 $cvnx. DeuesoIe bnk ebombn Ann LP (be Ma ecattvgr company.~awed by 08HO 114« Oa knows ewes meeet ~meet° enema envnates ar1: AMEA9?.AA8CO.<702FAHG.MLTSCACMNRAIPO.OASPESVAROSESACSEVGEN.SAUPLA411Wend WPX EFTA01097795 13 January 2015 HY Corporate Credit Energy 'Figure 122: Rosetta Resources Financial Summary NON ISA la 44011041UV 010.10190 410441 640401 I*/ 0 14214 S SwiaNada 3322 ▪ IISO•001tas 1062/ I000 15114 Snell Saga 4/4. 3034 O1040400.**0 10034 4.10 014 Roam 310 111 2T 41 1412 I73 121 O440,0 a/0 004 4.4/114 ass '14 3/0 214 40 IT Clcan•Olob 63 M 141 WO Realielfrre.nOs• ftpo ▪01 112 • 1111 71 M OM a Mal µ la 110 707 21// 40 OOA OI 20 113 310 CST 101 62 06 73 30 1111 20 10 li I/ 4 CO a an ss ft 21. 141 2X 347 66 PI 111) V a.▪ Iota* OM /vela ton 56 It 34 IO 0114•00 al 14 41 14 In Lni(010/0.0.00•40. SO en W 4.4 4.4 -TU6S104.100•6114410. ml CO2 to 6T 7511 W ail Sat VT 0444 at* VHS 0744 AO 141311 Wm SW 04 if Wa I04,1441Natrel 4401 Ills 1211 It 07 MX 44 sae U0 4141 1/4044040 040 1.044.000, 44.464/ Pant 100 XIS I1M 72.401 al 0.341 R•4 400 00 14.44 0314 tam 1430 SUS SI II 4/0/ a/444n 04041 lax µ4 111/3 149, I.001 1144.3010,.. 11414 00 In" $4 47 11047 SOS Gina a ears. tfttel IMO IW la 2443 4.473 CVO 114 0.4 W.1•4441041. Sal 42124 42031 faro WM ill •7 Till twits. //oaf ININ MIX 3304 1001 61.4 10741 14 morals. Ileal 440 14.414 100 414 VAI nt( V01 log E 44444414044440 a 44301 4e10 APT 1011 14.17' 104 44.444/1444 ea) IbX In 14721 64417 Intl 14101 Mw.w4 Cann Vat MI a R44004 WM MUG I472I Ilan NOT WM 021 4* Ca II NI fi245 51031 074 $543 mm 1411 41 044 44 035 5.47 114 us 0475 $405 $101 0044 4123 4120 510.4 Mips 11223 $IM SI/ 01 014. 41.3141 a• 121.37 41671 SIM In X INN $7 $1040 012 mal 110 Rn 1,13 6310 4.4 an SIM 111It ▪ eq, '44.5123014 III," InR 11114 03.71 441 410 S. ins Nana, 44 0610 RIO AO 4b SO II 12(10 no, WM Ia4 fan Me but 01.0 'CO 116 14 11 W 70( 10 414 032 011 WI 0.81 (COI Imo N0 4. w 41 mix 0. 16 If 71 Ca am cast 4.41 050 Inn 0011( th: 101 0611 $111 OKI 107 104 26 111 0 37 191 VS IX 110 410 • ISO Ine 1114 Nn 1.1/6 II* In 410 Y•440•44 WM* Pta•Ort0 raIla am. ay. 6441 411 24% a 27% 4)% Paarea 37% In A a▪ % 44% a IS% a -TUC001001/44 041104,40 40.4 WA Cosa Dian 1244 1114 674 16 444 Its 11.34 & fOtteltim aM • OM at. as Dattoon 244 24. /64 Zr, to 274 'a 214 11410040100C 24 Z.% Z Zr, 33. aaree Nsoes MS 11371 001 MX 14.14 X 4701 1130 Eloaree Owe Mesas slap IXX I1441 1112 1 IMO may 0•440040 anaaa at • 4•4 4241• .40004. 44 41,4 as eta 0 Oa 444.1404 4.0 a Ora too Tr earn. VOn 6 ~Ma 00014 • 120C se aaargata• .1.1104•' P40044 1.01 MAO Man M(00 0(4111.0,0 11Y ( 00 Lao Ar.n1arrY if liee sad l'a Wm. %ma .1.01.104a Inn? iettn co mama volt e0 ila 43011 Lona a Ole POI 44a114410311 70.0$ 444 .444. Cr T/4 0044%, 02 440aes mew a* . 7i liba Oa 4144 al A 4. 04. a% 441444•0 alien Kra, 04411.0•4/ aft a 4.10411.010011 7001100000 001 T▪O 110041/1100.404 w0 41444 tar 4010042121 Of /11410.40400 : Ca Stn. Ian 4.so Mt CO f a% tar 4.$0004,M 7$ at" TOW Cal 140 NO 001 latO 1000101041401•44 11111~ 5.- rirt ille0144 00 4 ' Mel 134611/117131.% • Lle 2041 231E 41% 4 740.610 a lit • 622 110.70A 4040110,0weat mama tnt San Deutsch: ant Commay Oars Page 142 Deutsche Bank Securities Inc. EFTA01097796 Figure 123: Commodity Price Scenario Analysis: Rosetta Resources Sensitivity Based on Bloomberg Consensus m FY 15E &HUM (S FY 15E FCF minion) /MLY. Gas ≤ re :fel Gas ≤ mrfei $1.75 $2.73 tin 33.25 $3.75 MIS 34.75 01.7$ $225 1175 $3.25 $3.75 $4.15 $8.75 9300 $224 $249 $273 $297 $323 1351 5379 530.0 16771 1654) IMP 155091 (34851 1460 1 435) 5400 $327 $352 3376 $402 $430 $458 5400 ($6841 (5492) 11459) 114371 ($413( (6358) 1362) 5500 $.182 $431 5455 MN 3509 $537 5500 14321 1409) 1387) 1527341 (173411 Can) 11291) $60.0 $495 $510 $534 5660 UN $616 ($3591 ($33)) 1314) 112321 02619 ar ts 4121u m) $70.0 $540 $564 $559 5613 1639 $667 $695 $70.0 12871 (6254) 1242) 112191 11961 390.0 f619 $643 $668 5692 1718 $746 $774 $90.0 ($2141 1191) 11691 111461 (3/231 (MP 172) 5$0.0 654 $722 $(46 Snit 5796 51324 $652 $600 amp (PIP i$90 1571) (3601 1251 91 FY 16E EOITDA (S FY 16E FCF (S NiMLY. Gas :Sar.fei N COL,. uas mrtel 51.7$ $2.29 $275 S12$ 53.75 242$ $4.7$ $1.70 UZI $2.75 1125 53.75 $425 75 5300 $131 $157 $124 $211 3239 $268 1298 $30.0 (SUSI dam i$202) tram (32361 (5209) 1179) $222 $249 $276 $.3)2 5330 POO $369 $40.0 ($2551 ($229) 1202) 1$1761 1 1461 CP 19) 119) $50.0 5314 $341 1367 $334 1422 5452 $481 150.0 (51851 (5130 111127 386) Val (UM SI $840 $406 1432 1459 $486 Pm $543 $573 MA ($751 IMP 422) SS $32 $62 $91 $700 MO $524 $551 $573 $806 9335 56(4 $70.0 $16 $42 $19) $96 $123 $152 $161 $90.0 6593 $816 1813 5069 9197 $727 $755 083.0 $106 $132 $158 $153 $213 $242 3271 $90.0 $681 $708 $734 $76, 1789 5819 1818 #90.0 $196 $222 1249 3275 1303 $332 $362 FY 15E Nel Leverage FY 1SE Debt P,oved Reserves (Slade/ NYMFX fl . lel NYMEX Gas (5.Thels) $1.75 $2.25 $275 3125 $3.75 5425 $4.75 75 5225 25 S3.75 S4 $4.7$ 5100 1097 977 8.77 8.0. 727 16* 607 $300 51,5 fi 4 $1 4 SI 4 $14 $1.4 $1A 5.40.0 73* 7.17 6.67 6.1. 56s 527 4 87 $400 VA $1.4 $1.4 37 4 $1.4. $1.3 $13 5504 (507 557 6,27 4.9. 4.67 4.37 407 $500 $1.4 $1.4 $1.3 $1.3 $1.3 $1.3 $1.3 550.0 4875 4.57 4.37 4.0. 318 167 3.47 $60.0 $1.3 $1.3 $13 $13 31.3 $1.3 $12 $70.0 407 387 3.67 3.47 3.2., 1.05 297 MO $1.3 $1.3 $13 $12 31.2 $1.2 $12 sea* 33x 327 1117 2.9. 218 2.65 257 580.0 $1.2 $12 $12 $12 $1.2 $1.2 $12 1900 297 277 2.67 2.5. 247 237 227 $03.0 $1.2 $12 Pt $1.2 $11 Pi $1.1 FY 16E Net Leverage FY 16E Debt Pioyed Reserves (S hick) NYMEX Gas mc101 NYMEX Gas 'Smola) II. 71 52 21 $2 221.25 1171 54.23 $475 $1.75 $225 $275 13.25 $1.73 25 $4.75 530.0 21 Ix 12.27 u4. 12 47 1077 937 827 $30.0 Si 7 V6 $16 $16 $1.5 $1.5 O 1827 540.0 11.71 9.07 9.17 72.: 6.5x 5.97 $40.0 $1.6 $1.5 S'S $15 31.4 MA $14 .4 $500 7.7* 7.0, 6.37 nil 5.1.. 437 4.47 5500 $1.5 MA 51.4 51.4 51.3 $1.3 $1.3 a $600 54, 677 4.77 4.47 489 377 347 MO 0 $1.4 $1.3 $1.3 $1.3 31.5 $1.2 $12 $70.0 429 3.97 3.57 3.4. 3.1, 297 277 $700 $1.3 $12 $12 $1 2 31.1 PI $1.1 180.0 33* 3.1, 297 2.7. 238 2.3, 227 = SOO $1.2 $1.1 51.1 $1.1 $1.1 $1.1 $1.1 180.0 2.6.9 2.4, 23x 2.1. 217 It 1.77 $90.0 $1.1 $1.1 Pt 51.1 $1.1 $1.1 $1.1 &tom 088991e8.* Abaft*, tan LP Pp .(Swag oamonns nig coon{ by 08 Mr) Wet,. loxionslepreoneecaPtovntiegoonsimnoemmartoot A PER.ARSal.CX0rAFIGEPELTSCAMNRA600.0ASPLPVAROST.SIAS(VCENSMTPLIKRW end WAX -o EFTA01097797 13 January 2015 HY Corporate Credit Energy IFigure 124: Sanchez Energy Financial Summary 1.0144 V06012 NCY.. 7744844 NNI 04031 11004410.15441 0.3.0 21 160.0 1000 405% S. 1404 Le 2323 10•4050444 154023 1.5.4011 103 CC 000 24 10 IN Is 207 04 0 it.. 40412/0114400031,0041. 004374.*. 14011000 24 10 13% 14 91 04 43 022.0007vs 32 ft 40 60 60 IN 0 11014•01.000041401.1 III 111 Ill 0) 0 (g) 0 6070.0•04.100.4 IP 0 li Jr It a I DO4 34 61 41 71 /0 204 16 134 MI It 41 M 93 56 MI 112 74 110641 I U U I? 24 71 0 11 till 00 cern • 21 32 0 27 75 00 .0 awn I 1 4 V 40 00 0 8 0.4 sno am. . 4 . I 5 . (6704 area • n 6 020 70 04 11(4 0 Ton NI (4 27 22 164244.0 1 14 3 023 a) 66 00 V • • • LTI.E0.1012..4.09.• Ill /00 70 10 0) 0) 0 VS LT• 251110304001 Haden CM MI 300 154 MI MI 0 210 1010001121 00013 1•741 14.011 $100 WM. 10112 $0411 MCP .4/14.001.010.300405 043 1345 102 1493 096 142* 00 474 100•06.42ien laia %On 041011.031110411 9:4 104 lila 1 466 640 9.47, )03 390 II•60.001 Caa 060014411 1.10 LW 140 1440 1414 140 PIS 120 Cu64011N01.410 4.1101 40 1.%9 1.29 104 140 502 416 100 5010001A440101 0114 OM 11444 Wit 02 46 0460 404 010 104.61110040 (14501 144 234 212 M2 WA 1.70 9 455 54410.3 MOO 6.10/ 2.040 1043 00.42 141.74 12012 1034 ION 000 eau 104i 0000 06.00100.0 103 1.711 101 MI 3213 001 401/ 302 NO 624.401114001101011 KIM 47421 1:40. 1703 970 ION 1044 17411 14.44. I 004409 ibpos pa 040 546040 MIAS 17424 MAI MO 957.10 50239 VIM 5104 094 44,4, 0121 0225 0461 4110 1.17S 0214 0121 1130 044 5140 471 11142 11506 00 434 $71644 14132 DO0 136 43 11479 13421 13794 100 191t MP 040 0040164 Incur 11711 $23.43 11412 1120 1.15 1) 144 $1315 0001 11.73 1770 1)45 lea 1777 «0 10.16 1766 01712 1410 SO 15 1.0I5 1015 14315 11703 10 15 19 Noy 160 4/10.00.5i 61511 12101 11101 03 (6 121(6 12156 17010 114 00 4000 11524 14/0 fill 101* $7115 5190 574. 1 /mom now 1010.10 4.11110104 57 >I 44 07 10 CO X) 600 Tim 37.91290 020 045i 0441 022) Cq0 0277 070: OM 00.2.70.40 43”04.110 MI 14 WI Oa ii 44) OO Cut A0000:r0.1? 5.•••‘• 1111 m1 PM (We M Eno 1103 1/00.1 leo, C0, 00/ .0.01 2.44cri. nes 0 1 MN 011 MO) 00) OKI 011) n .,01.),01 Milli 11111 OM illai « (TNO 00 0•04. 0 0......40 44•1144.04.4 in...0.. Woo (61i ISA In 01. 160 de) MN 000 04900 5100 004 cot 440 w 111 3IG 9E 2:4 to 156 leed C- Nairn o Maas 107., es 1414 130 .16.0 I.10 tartan Y0 Oath $14146n 040,1101.404110601143744Gul 0516 00% 333% 151% 02% 215% 115% 114% _,..l.,. Gant. 711% 9144. 3770. 146w ftin. Moo 131w 7404 mrei cr..0 50000, (010XCie. yews. 0,0 C602420107001 %a S1K O. fa 194 614 He 614 000.11202 344E_00L1 0. 24 21m. 434 414 414 Ito 14412.4601g00 Oa 216 In 24 274 274 122944 al. DetIP..... 1400..r. WM 0010 1, 111 12.4$ 194 tan 1515 1010 511041 12401 1042 04 42 PO OS • 570.15 500 0401 04410104400211 0•02 60.2( .101 104V.M anlpitS)*(049010 0n.e• 596 10064040.11.044010 Tau To Rowan Ns 00 pool 10 4 30 T00.00,444001604.46014101 P 0000 • 00040.400 10 52 4.44 .4444 2244 .41•60 Y Van 20 00. 0/••.040,01441 2014 900 4,06 720.1•004 11 se sat 104020.41Avee 00 000 a 0.16.4 00004 004•0100120104 %Oa 12w II% rat Os 00441104 00 %0.044100064.01 11% 42% Pow 6 0 Tow Mond Ogg 4144 P0039001 IMO 3443,. 490. 71% Seen 1010. (Ls 2321 45 Pawn 114•140040 tOr• Oil 3440% 630% •Oo. Siva hoar On ten 1.145 209.o. Ott*, 141 1.•...v. - PV 411,104044 ting 30 701•1 041 1.145 1,1001 1.145 Slah 4.11i tiorra...0444 _1,444 37% 1114 .1317 EV P. 1010.2'" 1447 7$ 47% 9%-114 Nn coroor CloTDAX 144 014 Pored 160.0.4411.100 014 Powtglc24....... 4.44.4•04100" trna 4.4 sanla tem Catrei...nnlyasataeweatt• 0010.e0.0.w u 0.600 271.0100altann40140.402004/11704044 San Deutsch, ant Conway So Page 144 Deutsche Bank Securities Inc. EFTA01097798 Deutsche Bank Securities Inc. Figure 125: Commodity Price Scenario Analysis: Sanchez Energy Sensitivity Based on Bloomberg Consensus NYML). G., 2 rr. .:te. FY 15E El3ITOA (S YMLX IC) FY 15E FCF (S Million) 4 5901 3 GO 61.75 MIS SUS 13.25 $3.75 VIM $4.75 $1.75 $225 $275 13.25 $3.75 $4.25 $4.75 5 MO 1228 KM $248 5257 5266 1.272 $278 $30.0 ($5271 ($5171 11508) 1499 (14901 0485) 1479) a -2 $46.2 6289 $293 $301 5318 3327 1332 UM $400 04891 (24110) 11451) 1442 (3433i ($428) )24221 a; 8 SA $349 $$SS $396 AM $387 $392 $396 $500 ($4121 ($403) 11394) 2265 (23761 (1 MN 123657 n En MS $409 419 $426 $438 3447 2452 $458 0 $40.0 (53551 (53461 1$337) 2226 (13191 ($314) 12.9M) $760 $499 $479 $ag $498 $507 1112 $114 $70.0 ($2981 ($289) 11280 1270 (12621 ($226) 11251) $86.0 $506 $516 $526 5535 $544 $650 $556 280.0 02611 ($252) 02421 1233 02251 ($219) 12214) $500 $597 2547 $557 SAO $575 12161 $686 $500 02291 ($220) 15211) AA 01931 ($188) 0162) FY 16E EIENTOA IS Million) FY 16E FCF (S Millie:1: kv ML X Gas :5. m<lei ',MIL% Gas m.:f 21.11 $2 2$ 1275 13.25 $3.71 $425 $4.75 ft Fa 122$ 2275$2,25 $3.71 $4.25 75 $30.0 $76 $99 $111 $122 $134 $145 MO 02561 ($247) 113241 0235) 02131 ($207) ($191) $40.0 5151 $110 $174 Sill $197 2209 $220 $80.0 4 1651 IV 73) MO 111511 ($1401 ($1291 1118) $50.0 5226 $239 1249 5261 1272 12141 1295 MA (11121 ($100) OM) 1278) (491 ($681 11451 MO AM 5312 $324 5336 $347 1359 $370 0 WM (3381 11271 1116)(54) $7 $18 $29 $70 $376 $357 $39) $411) 3422 $434 $446 $76.6 MS $46 $24 968 40 281 $102 $80.0 $451 $452 $4/4 $485 3497 $505 $.520 $93.0 $106 $117 $125$139 $161 Ma $172 $90.0 $626 $537 $549 $560 5572 $683 $595 $1010 $175 $187 Me 3209 3221 1231 $212 ... --- - - - - FY 15E Nel Leverage FY 15E Debt Nosed Reserves( S. Melo N Y MF X C., 1- le: NYME X Gas (5.mcle) $1.75 $2.25 $278 13.25 53.75 6436 $4.75 225 1 33.75 6125 $4.75 $10.0 85x 87.. 7.7.. 74. 7.1* 70x 68* $300 56.2 162 351 $6 1 A1 141 26.0 $400 66* 63. 6.0* 5.8. 56x 55.2 4. $400 $6.0 $6 0 $60 $59 $5.9 $5.9 $5.9 $50.0 52x 51x 4.9* 4.8. 4675 46x 4 6* $500 25.5 MA $56 $57 $5.7 25.7 $6.7 $80.0 43x 4.2* 4.17 4.0. 35 18x 187 0 $60.0 $6.7 25.6 $56 256 536 $5.6 $5.6 $70.0 36 35. 3.57 3.4. 321 13* 127 170.0 $6.6 25.6 $56 $56 536 $5.6 $5.6 2000 33x 32. 317 3.1. 334 10$ 257 $000 $6.6 $5.6 $56 $56 536 $5.6 $5.6 $90.0 31* 71). 2.9* 2.8. 28. 281 2 7. 3230 $6.6 256 556 $56 38.8 $6.6 $66 FY 16E Net Leverage FY 16E Debt.Proved Reserves (Snide) NYMEX Gas IS Ado) NYMEX Gas ISYncle1 2915 3211 51» 2:3.25 53.75 54.25 75 223 A.25 13 75 25 s. MiEtE3:1= $30.0 231x 25.0. 219. 19 44 i7.1: 1581 145. 1$30 577 270 14.9 $49 SO 6 $5.6 267 MAO 138x 127x 11.74 Ia.% 10.1x 15.2 11.9x 5400 $6.7 16.6 $6 65 $65 36.4 $6.4 $63 25.0 ISW 8.1x 7.76 7.24 8.44 65* 627 SAO $6.2 $62 361 $50 6.0 $6 $6.9 $5.9 I=1 $800 $218 60* Alit 6.2. 5.0s 4A 46* SYAO 2.5.9 $57 $56 $6.6 53.6 506 $70.6 434 4.3. 4.1x 4.0. 3244 37x 36. 2700 $6.6 25.6 $56 $56 $6.6 53.6 506 PAO 35* 3.4x 13* 3.14 324 291 28* SAO 16.6 $5.6 $56 356 $56 $6.6 $5.6 25* 276 2.6x 2.54 2.4x 2.4x 23x $90.0 16.6 $5.6 $56 356 $56 $6.6 $5.6 Sawn,. Ocvernettwk Pearturg /WWI> LP r(77/041027v0 orronvy no twee./ Ov 06 /NM MeV. me fawns fIgNelTeCa ft antwg °Gwen, egnntrel Gt.' A PeR.AR8CaCX0rAFIGVELTSCAlMWR WO.OASPE.PVIORST.SICSWEN.SAIMAIRWsect WPX EFTA01097799 13 January 2015 HY Corporate Credit Energy 'Figure 126: Seven Generations Financial Summary Nunn I MOS NO 2103 (INNS hCCONatao I icuie.3) a5Ma416 14414 Remus 104 123 .14t 443 I29 144,0401401p0C414...1.44”..C•44n:6•140311. et Pao,* 61 101 I23 144 443 Thon•ra Cada 13 11 33 147 31 Nub+,1.33•0 Can'tamp 0 0 101 11117043 44141100114 I • 111 135 24 4 47 111 400 IS &I 144 121 remtl IS ▪ is 33 121 161 4.4, 114331 en S 3) 17 ft Of ton 13 S 5321 01 0 , 0144 1011441 gluon 1 01 1•••• IN 3 12 17 32 11144/44/30 11.17.1101170414 wilhtliden 34 1IS 183 203 203 71 CI 11.17.1101170414 mahout 1101444 37 I" IN 238 no WTI 6440 WWI 5141.10 $10243 $11474 111233 $10632 110720 141 16 110337 WO NAM 03$11M01 1264 14.49 1442 $474 442 1231 412 Mane40AllsatRb Na Cu Pnalaceml tIOnto 2.113 2,408 ACV 3437 5332 11033 6331 7.240 A4024014.11 03$6, 44114.131 NA NA KA ra Net NA IN OYU°. 044.44 MO. 6 3 30 24 Maud Cu PAN .1.104, NA NA NA NA AN NA NA NA 044044441“ 16.1.4?? MOW 21.1 410 1441 12/1 1320 4333 234 14741 Au1200143.0/14 thata NA 101 MA NA T443,6lonlan04.1.<401444., 132 IAN En' 2.11/ 3.296 "a 1131 2342 7444161•4410n134414,40 1.03to 53431 14773 16111 163,17 MOO ULU 13133 VI* ▪ OparsINg Natent pw 3334 1.4024/Cn 114.10 san sent 16331 14412 NIA 16131 41112 CO 4 Situ Mbl 5108 11321 51441 $1441 IOU 4434 CIA 1570 Pet 1271 Pm 13.43 113.33 sea 1122 33SA SILO 11244 $1320 lox $1424 113.77 11707 11303 06144014 10:04•4 51.10 51532 lace 42235 510.4 $2112 S296 VP Mit 514.11 1517 VS8 1733 44 $4,71 SO 46 314 13 6 110 AtIninto NA NA NA NA NA NA xA IM 3.0 s. emu 143 .3 NA NA NA NA NA NA NA AA Pacttl. tub NA NA NA NA NA NA 34 NA RS C444 4140: LINT0A1•10144134. N) GS 73 103 20 3l aI 43.r.r1 Tam TONI 01614 043 0321 010 POI 0211 814 12/9 •714 PCNI, 04.6.10W01.401.34.1.1t 10 0321 14 4311 12 1221 Cm Amdal• gat Pa Sgroo IIM on) 014) (I711 0071 -4 0141 0 131 reontlit40 Cope0404 014.411 0 33 • 23 314 Ca* Me l24 0Th 010 PHI 001 C2013 CON )43u , If Mien Pet C444 The Mn 42441 FIN Than. 3 ,44.104.0 347 321 14? 117 117 141 337 con tutus NA NA suo Naos 4.15iim. NA 413 NA 743 70 7/4, •It 4.34 Tors 0.41 415 NA 743 743 7" 4(C toy (00.036110164. ?Wane Gott 14434st° Beaus ?UN.? Gin, 414% 21.7% 333% .101% 277f 4141% IOTA r Gout 00% 234% NO% 74% 74% LM Crod4 tn•Oith. 16171:1VOC.?. igertu oh? Ceatti0e01,N4i4.41 14 74 2121 4164 6.b 71). 714 233 44 :Lc i(t1131101.4. NA NA 3044m44 NA 414t NA 41, 1114 104 as Mr 04141071111 NA S4 NA 24 Let 21x 14 01305. rue Rtitnt1.13,41 NAL 14.18 NA 17S5 092 $7.92 4.11 postriaos musics. M.a mem NA VIM NA 13320 11714 4134 13340 04•0•140.44010104: 1.0774477.1 i314€4140 • Gnu). nn calt p4.43344.1•64 in Cary Tiu 1441110/11044?,....414crts.V.441504 40 4 Killatatd • 1.' 4•14 • 117 104 pals in4444.4 a eAerowir AM.} Rants . NM Gas 1.m.di 331423 44144134 AT•4044444...133 44 NO 00.3 30 04 Tie Piga,. • UNaltillet5) 41225 Val WO One canter/ 4.433 vat r.r.4.44 xoi CU (01•41011113/11 NUS MOW" in Oil II 0.010311,0”.?0101 433 046 duos:lure noun, an ro co 13 - 03 is 3470,1114.$1331141 SS MO1 4044111 %au St% au b17 nut/nu...14 km*1400211 At 1.0reml13541.4.4 <4 441 30 2011. ,04 40401, 41, 441110,141 mast. 4,41PY,10 it 217 WAN* IN 40 Cnnt Ary4441,14144413316 P33Nrm.mwry 7,4 04404, 414.11144 44141,0 Lai 14401 NS Swum. 0444 41140.1034410024.14 Maim 14443•34,5% NA ASO 744 740 11444.4114.4aren 94 On NA Nal 0•14 ?IA 14 0,01 14 4.4 11,611.1410141014 14F0110,44.4.1,14., 1 1013 4111.044•14 Mn. 414 Nu. Thu NA 3.771 out uf.fr, '461411)4.1 .44 tx 041/2/1044 vet 1I• 44% 5 33 • 1345 kNIN?v .185,01/ 444•24:4?.11)110.343.44 33%101 1002 411 iidinVedit MI AO A' Ce 4.n33a• ZA, Wt., *MP? tO al UMW 504314' 214433'4110 are* CCVNITly COO 1 Page 146 Deutsche Bank Securities Inc. EFTA01097800 m Deutsche Bank Securities Inc. Figure 127: Commodity Price Scenario Analysis: Seven Generations Sensitivity Based on Bloomberg Consensus FY 15E EBITIDA IS Million) FY 15E FCF ($ Million) Ne.ILX Gas ei NIMLX Gas 1 11.7$ 1275 $3.25 4335 $425 $4.71 11.75 $225 1275 $3.25 $3.75 1445 14.75 $30.0 1288 $311 $334 1357 1380 1403 2432 $34.0 (11.291) (11.26$) 1112451 012231 111200) 01.1760 (11.1492 1404 $329 1352 $375 1330 5421 $444 1473 MO 01.2521 ($1.221) 1112071 (31.1941 111262) (11.13% (11.11+) 1904 5370 1391 $417 5440 $463 $406 $514 1500 (11.213) (11.121) 111.141 aims+ 'sum 01.1(0) (11.013) 150.0 $412 $422. US, $441 $664 $527 $556 $60.0 ($1.179) (81.1521 111.1291 01.1021 1$1.064) (11.002) (11.034) $70.0 5453 $476 $499 $522 1545 $568 $597 $70.0 (11.136) (11.113) 111.0911 01.0681 111846) 011.023) 11991) 680.0 $495 1515 $541 $564 16117 1610 $813 $.33.0 (51.097) (11.075) 111.0521 1$1.0301 111407) ($884) 1956) $904 5536 1559 1152 sox, $620 $651 $610 $900 (11.0574 •11.0131 'mil (sese) dais) ($1.63$) ant FY 16E EBITDA S Bullion) ry 16E ICI IS ;AL Irc.1 NOILY. Gas :$..rr.lel 1:41,11..X Gas c 1191) 122$ $273 $7525 fr1.1$ 142$ $175 31.7$ 122$ $275 4425 5395 1425 8675 $304 $70 $123 $176 $230 5203 $337 $990 1300 91.3311 (11.249 41.2291 t51.177i ISE. 26) (11.014) (11.023) $44.0 $101 1234 1214 WI $334 $446 1501 $40.0 412227 (11.171) 121.1201 Wait 151.01?) ($906) l$014) 650.0 1292 $345 $399 $452 1506 5559 $412 350.0 (1$04) (11.062) 111.0111 119601 (39081 091571 MOS) $004 TAW $457 1510 $563 1617 5670 $724 $740 (11.0051 ($954) 11902) 11E611 (18001 ($7441 11497) $704 $514 1566 $621 $675 $720 $701 14115 $704 (10971 (1645) 11791) 157431 ($6111 (14471) 1$432) $60.0 $626 OM $732 $186 9939 SIM 1946 $pa ($7181 ($737) MSS) 191441 159/9 ($831) IWO) $90.0 $737 $737 1844 $897 $950 11.001 11.057 $90.0 ($8791 ($6201 0577) 135251 .1474, 11429 Mr*/ FY 15E Nei leverage FY 15E Debt Proved Reeerves(SMelel NYMFX Go. ff<lo NYME X Gas (S.mcle) 11.75 $2.25 $275 $3.25 13.75 1425 81.75 1225 $175 $3.25 $3.75 $423 $4.75 $304 4,44 404 3.6x 3.34 3.14 2.14 264 $300 $2.1 $291 $20 520 $2.0 11.9 11.9 $404 174 344 314 2.9. 2.74 264 2.34 1400 $2.1 120 $20 $I 9 $1.9 11.9 MA IOU 321 202 274 2.64 244 225 102 1500 12.0 520 $19 $19 11.0 $1.0 $14 $60.0 284 28x 244 2.24 2.14 204 184 0 $80.0 11.9 11.9 $1.9 $111 31.9 $1.7 11.7 2,44 234 214 2.0. 1.94 1.74 184 $70.0 11.9 114 $14 $1.7 31.7 $1.7 114 $104 221 204 1.9% 1.8. 174 1.64 144 9104 11.9 114 $1.7 $1.7 VS MS 114 $944 194 164 474 1.6. 154 144 134 $900 $1.7 $1.7 $1.7 $10 $1.6 $1.5 0 5 FY 16E. Net Leverage FY 16E Debt Proved Reserves (Slack) NYMEX Gas IS necle1 NYME X Gas )uncle) $1.79 $2.25 $275 $3.25 13.7$ 14.26 $4.75 11.75 32 36 1275 3135 30.75 $4.25 14.71 130.0 4764 25.0x 17.1. 12.54 9.64 7.7x 624 1300 $6.6 1S3 $51 $40 $4.6 54.9 242 1.40.0 16.74 1134 9.54 Lb 1124 Six 4.24 202-0 SSA US 54.6 113 141 $2.9 $3.6 5504 931* 754 614 5.14 124 16x 3.04 SSD 0 14.5 143 $4.1 lie 33.6 $3.3 $3.1 $004 aft 544 4.24 3.54 104 264 234 1600 $4.1 $34 $36 134 al $2.9 $24 POO 42: 364 104 2.04 23. 204 104 1700 $3.6 39.4 53.1 $29 12.0 $2.7 12.5 MS 23x 284 234 224 Lb 1.64 144 in SOO $3.1 12.9 128 127 125 124 123 IMO 21x 204 1.84 Lb 1.42 114 124 190.0 $2.8 12.7 126 $24 123 $2.2 12.1 San Owacne 9*et ithambergIWnce CP Panne browny ON4204*1nce convect 01,087490 We Vst forocaers Vow re.Wf ft antinv COMMA,' 41VMM/h. 0*.' A PeR.Ail8a1.0X0 64.4404PC 22,CAtinWRAINAOASPE.PWIROST.SICSIWEN.SAI Was 72Wsect W.0% "t3 00 EFTA01097801 13 January 2015 HY Corporate Credit Energy 'Figure 128: SM Energy Financial Summary Na. Rea Asa 4 la bet. %a ...AID Giara 10 0411040 (lad dab 01331 MX% bt. %a bp WI aa 10 011 0.0 100•11 Mae% 1113$ {tat bt. %a bra 4•394006111.40 Watt) Man* {Ill 06 4 MA :b. Haul a 1143001•44196% tam 13 I a.S17 11131{ l(4. 4 Obb {XIX WOW SA 7iNai air,0.74 tat Cat 'baba JI a Ka. Olt OA $73 OR 424 VIA DM , slt Stn Pax Ca 213 to VP RS 1411 In 439 141 114 an lak44100.nbin tan 121471241alalpi OW 4T IN 2/4 341 2 In 140 143 1.2XI IX Cm UM XI MW 413 0617 324 I*1 130 X* Mt 167 Xi 264 636 hat 34 X 34 36 21 46 4{ 64 *3 ligialab IX Ill 106 XS IX TM S 2214 MI Os assts. Cl n CO Ili aft X 6406 in A a Sacra 11 IA I VI 4 AO VA IX In 0371.0 all 03 IS W 40 340 MO ON 174 /a 4 I A A Ia AO Ill 1771 XS ▪ 0112Al 14.6..• 1.267 1.01 1,131 1.14 MIA I.00• (1{1COntobtbbmta I.1tl 1A36 1.0 1.0 1.1 IAN ▪O ▪ 067 SAX tea tInta•01464 1414 1741 011 133 Of XX OLIO *114 014$ VA haul is erg Pa tur...4044 1.44.11 331 314 4X XI 3M 4.30 4.10 IX 371 Key Raba a cab" t.e.-4 Ontario , 7'I 73.6 A 30All All OCOA 34.460 140.1410 tt.n3 114 031 MX tabs bra On...1nel 4V a III 4,44 401 404 IN lb Craws Cm taxi, Fab SW 3.1,44 3414 at at 43101 SPA MA 43372 46a1 134 net MIX 1310 01111 SI ll XX. 0444 WA VW OR AA Cans tata Ian Pal La ILA 1403 La LIR WM 3.474 4 IV 3373 Mai Initba MX M% 3434 AA 7130 A.V AA 47X AA AA la taalon Late/ 11074 76.034 11ta MVO 43X0 MAI 3111161 WOW 24444 3311145 biattart Peas* b %I 7141 750 744 314 030 lA labatittnotal PA 1120 1304 73441 11.100 1.111 XX! MIX XIX 43342 ra *Nan Pax Mal 47.C• 43t0 44a31 44/0 4774 XS 401$ 4112 AV Rae. • 0/04111414044164 alb 0641.na 10.011 SIM NM XIX NM 44614 KY W.R 1430 bat Ca 13144 an 1613 31337 1 130 11341 11332 11014 11414 O114 LM 6363 PM UN 6316 1313 $432 SIX MIX Da 11{33 06.31 444.1* 31403 1 1371 $1421 11114 11344 11714 Cal% bow PM 61431 Ma OR MT Ma PIPS R.R 113.40 sint MR 1114 $121 V 44 11 73 MIA XII QM MX a a 143 bites, MM XIX PIA 111 14 XIX lila 117.13 lila. 1., on tatlimbet, 61343 MOM 614 13 MX MOM lit X 11341 11373 1108 a Ma ab MN MA 411/0 OR 0130 Van MA MR 411.04 41•40,0 now littVaitelluivi a 214 331 40 .2“ IW 024 4 04 4 440 Crawls. (ii 0 4,:i di VI LI 0 'labia la al OS MI Inel Mal Ian la 10 13164 Cult alairas Ca 21 ( 10 144 X 71 414 Olt 44 X Ca. Abatis Oa at* a 27 0141 PM OM 4140) 10 at Oa. Capazalial 14 A 10 X 04 4 [alb II MI WI lir 37 41113 13441 12 W10 030 / MI/I Diatt a.%% 44 OM 03 SS 44. aria Pa hand 130n 71 IN 1431 a fan 'MI MO XII) Ma 11S40442.40 Ca 0 2/0 IA 161 0 0 IX 4 332 ass lea as Oa IMO IMO PACO la 17300 110 IX 3143 4640 C60 boa 21 a MO 343 My 14. Ia IP* 10 110 IPA 1430 4443 Tealnan Anna Masa etbso ban MOM an ON1 OM 37% V% In I% 11% St% X% 43% x24.74 Vaa. 71% 31% V% IX It X% 31% >W 134 .111Cal asks Matta. tbetal Celanbal OL lam 4341 lap 13.47 XX 1744 Ott 024 Ob a Caaltbu 14 Ib Ib IN LI 140 4.4410-1/a *St Ob Ib IA IN 401 DaPeal bra a463( MV MCI SON MV P77 16▪ 37 1074 10/2 VW DitalbalCaa tab OWN MM 1134 MA MM MA 0144 lin X A4 Ma Calrassaar tai bap 41 taxa Cite I 414a014 Sara IM maartarla Oraiallin1 plata 'Pass DISISSI 444/06 01410 LIMN a area a 41 1311" 140 inatanautnallallia nave PAX bars • 1440a4 60206 IMMO 23.343 Caas Ia 14 an ON IAN Mon banap rata m 44701m.4 Ana bia It PPM Gm Itabratal 1910316 110010 3133313 %Os X% 41% X% %Paid taille0/ X% M 44 CM ha.. a 1MPa ae 4244%Sar lea a XII a MO Familabial 0.9 Oa% bra lea a al 760 artaaina177 111% 311% 1 131, tba an a al CO *ea Plasial Dan 3/4% MO% Oa% 4.44% {baba a MI •40 a . 10 rears an 7 4. 1 3W 1314 3644% boa an a3144 AI Taal LTA 11.10 Cap 2474 It. Pans1 Lab • Nap Past La Ca PON La -_n. ••a 4477 1110•40.4 fr .., beta Pay Lama PP MaNgialla Safi nos 641110044 Prat DialliTat In t la ▪ inurabr. VA area axonal inapavatetaa tea n Aar AMAX et baby raa 111. a lbtmaallma 210010% m istiewar ba•7 ea baba 04 O abatinal Krace bay at Nab/ m &WM Oftittee est COaallf Ca, Page 148 Deutsche Bank Securities Inc. EFTA01097802 Figure 129: Commodity Price Scenario Analysis: SM Energy Sensitivity Based on Bloo—hp-r?Can, 2nsus IMMOS )ueO 0143S)110O FY 156 EBITDA (5 Million) F3 15E FCF 3/3131114 tionitiX Gas :Si NYNEX Gas libido) 11.75 1225 1275 13.25 13.75 TAM µ75 $275 $3.25 53.75 SOS 54.75 130.0 $651 1709 1767 1425 $883 $845 51.003 190.0 (11.126) (51.077) MAKI 119791 0301 (1 (UM ($M) USI 1912 $970 $1.026 11.090 11.14$ SPA 1/.000 (59551 1906) 117671 MIA 1756) 11706) 540.0 1795 KO $816 $1.057 $1115 11.173 11.231 11.293 100.0 11021 ($8331 1/61) 157341 16851 (66341 t$5$1) 1000 1113 11.202 $1260 11.315 13379 11.05 $60.0 ($7591 ($710) 1561) 156121 (SNIM 1611) MC) 560.0 11.005 170.0 11.230 11.288 11.318 11.405 11.463 11.524 11.5/10 170.0 (UM WW1 11539) 11101 14411 (13991 MK) 500.0 11.375 11.433 11.491 $1549 11.6(0 11.99) 11.7211 1403.0 ($6151 ($466) (1517) 113671 1 311 ($2K) 1217) 160.0 11.62? 11.596 $1653 11 711 $1,769 11.131 51150 990.0 10761 132% t1217, 13111 (51021 (1133) 001 FY 16E ERITOA i5 Millionl FY 16E FCF (S Million: Tel t, /MLA Gr. $1.71 $2311 $175 $125 $171 1435 $4.75 $1.75 122$ 11.70 4125 5175 $421 14.75 $234 1325 1.422 1516 113.0 ($1101) (51.293) 11/121 11.1251 111.0301 (60511 ISO 010 ($471 $46 $140 $03.0 1159 1263 1377 $471 $565 1651 $752 pap (11.167) em.cteex 1893) 1173)61 115191 (1732) (144.5) $500 $426 $520 1313 1707 $801 $895 5989 150.0 (WM (501) 17741 116671 (6001 103) 11426) 1462 $756 $850 UM 11 034 11.132 $1225 9900 (57291 (UK) MSS) 114681 13811 (5290 11207) $504 1993 Ku? Wel $1274 $1.344 11.01 $700 (46101 15131 (1336) 152491 (11631 1 751 112 170.0 UP) $1323 11.417 $1311 11.605 51049 $90.0 12911 (1204) 1117) ism 166 1154 3231 $90.0 11.136 11.230 11560 11.664 11.73 11.942 11.935 190.0 1701 117 1104 $190 $277 $365 MO 11.372 11066 FY 15E Nal leverage FY 15E Debt Proved Reserves (S Mete) NYME X Gas (Snide) 51.75 12.25 1275 $3.25 13.75 14.25 µ75 1175 22 $t75 $3.25 $3.7$ $125 54.75 4.51 4.1. 3.5. 354 3.22 10* $300 143 $13 112 11.2 11.2 11.2 112 1300 502 361 331 Ils 216 2.72 2.14 $400 11.2 $I 2 $12 $I 2 $1.1 $1.1 $1.1 WO ON 322 261 215. 2.42 222 2.111 1504 $1.2 $12 $1.1 $1.1 $1.1 $1.1 $1.1 SA 3.07 2.72 252 231 2.24 2.12 192 112 $60.0 11.1 $1.1 $1.1 11.1 11.1 11.0 $1.0 560.0 0 226 214 20* 1.1 152 1.72 1.6x $70.0 11.1 11.1 $1.0 11.0 $1.0 11.0 $1.0 POO IS 1.72 IS. 152 1.42 122 5174 $1.0 11.0 110 110 111 $0.9 $0.9 $10.0 1.112 15* 161 115 10. 131 It 1.25 lirat) 11.0 $1.0 $09 $0 9 30.9 50.9 109 $10.0 FY 16E Net Leverage FY 16E Debt Proved Reserves (S Mere) NYNEX Gas IS. =le) laYMEX Gas (Sande) 51,71 $2.21 12 n 53.35 13.7$ KZ 94,71 $1.75 1721 25 $1.7$ $4.23 $4.75 .947x 96.0•. 374. ICS( 12bx 95x 755 190.0 $1.6 $1,6 11.7 SI 7 11.1 11.6 11.5 190.0 9170 22975 14.92 10.8. 8.4 11.74 66x 4.7x MO $1.7 11.6 11.6 115 11.5 MA $14 $50.0 9.4* 7.4* 6.1x 5.1* 4.14 3.72 122 1500 $1.8 $1.5 11.4 11.4 113 $1.3 $12 4.7x 3M 3.0s 267 2.3x $6041 VA $1.4 11.3 11.3 11.2 $1.2 $1.1 1000 54* 4.07 3.32 327 2.0x 2.54 224 1.9x 1.7x $700 $1.3 $12 11.0 $1.1 11.1 $1.0 $1.0 1700 $80.0 28* 23x 20x IAN Ialx 1.4x 131 $800 $1.2 $1.1 11.1 $1.0 919 10.9 10.9 $10.0 ISM 1.7x 1.5x IS. 1.24 163 0.3x $90.0 $1.0 $10 1.19 919 919 10.9 10.9 Sums Oraitsche Unit ithambeg fame LP for Me (Swap °alewives nialconereelev (59 Meth Watt me ilartabbes6pates mew Keembege eanstinot simartates am, 4/4CPER.Mt8CUCSO 4:5010147.155(450#0.140.0A.SPLPV4ROSt.SALSWGEN.S.44 Mat 72Wend ine4X -o 01 ID EFTA01097803 13 January 2015 HY Corporate Credit Energy !Figure 130: Triangle Petroleum Financial Summary SOU* II% 54e4ar .642032 CC4 150422 162617 101 1.,1..,0.4 Malan • IN 142 174 502 03 31) AMINO MCON00441, 10/41• 0.34 Pot 61•0275 4414.44 09 IN 174 602 90 214 44400 cat. n 56 ri lee 245 54 t$ Manna )`1510 C-' Vao) 0) 40 01 07 01174.4 4111 4494 4) OS 010 19 20 21 V XI 1O 11 nnrt ID 12 27 3. Ica n.40 $.01ice$1.31Nrs. 10 19 31 24 43 0I) 34 Onrs 10 (49 010 3 0): Oto in,. Omni. tell 615 onrX. 041 61 Inn 6 10 10 19 44) 64•116(4644 17 44 K IS IS 041 LTV CONN 4410116410.• 72 140 14 122 403 203 1 110 OW 44028 44441.4144 M 104 H6 177 20 207 yi µ Cu*, 1.12,6 $10133 13010 110110 5140.10 INN 71175 41731 left II.0 Namtlea. i1.46di SIN 410 IA N $4 26 $111 4.21 .4$ 12 3343 144/ Pv411.044 0•14 14nrol Gat lIteclext 0.1/.11 IN 30) 441 AN 654 I.6m IN 030 Manna NO Gm 14.4• 11.4/41, 446 $4.20 1421 15.41 14.50 MN 475 Nil Cn.A4 011.”1$01. •1.40$ ma $77 CI 417 347 IMO CS 1)21 Pc44JCS g$, e 49,1 11410 479.64 49) 4 13247 Ma 183.39 193.73 W 4o c40.0.,Pat nmricrat•14.14$ N al 52 II 40 II) 3 72 11440.0t. tin littli 53444 55205 WC $352) 33224 542.42 00 01 $41.72 Icul (.2..• ;Jar. P.)3.4.$ 1$‘4., RS 467 721 971 1.121 8.447 *3 1.121 T4431 (.2..• Wet 1$4.41:011.00i 11739 47114 99296 14024 VAN 41014 $0111 WM Raten. 4 Opralai Mars p4r Ile• 141µ/1[n WM Pt* 14.63 1424 670.44 Pea WM WM 0111C404 61651 $1519 115 44 O5.4 0443 $1529 Ili* 117.31 O4 5427 UN 1457 5423 1114 5432 12491 $442 DNA 13614 5269 5472 124.15 WM 52111 =SI $21.47 000454/140414 937.71 fall 93916 $3434 127.70 1.31.14 MM 114.37 $14,441 13.20 1527 151* NO MM N1* KM 1314 21^..I twain 40 410 $170) WM $1730 $17.50 $1054 124 0 $17.30 3.p 4.3 NO a Oa° sat $1135 $1511 II5 II $15.11 51511 11511 $1335 $15.11 FA 4,00 ON NM 4014 NW NU/ 144.15 4477 VOW 141.31 Fr. NMNan LOITOAX 401. 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Gas 'S 71:fel 130.0 11.75 $185 UM 1175 $3.25 µ75 $425 $4.75 41.75 µ25 8175 13.25 13.74 µ2S µ75 a $IM $ITS $IR $191 $193 4191 190.0 ($2271 (6225) 1224) 11223 02211 ($220) 11219) $40.0 $196 $IN $199 $201 1202 $294 4206 $400 ($2171 ($215) 11214) 11213 ($2111 ($210) 11209) a_0 8 $500 RAO $206 $219 4209 $221 $211 $222 $212 $224 5215 5225 $216 223 $217 $223 150.0 ($2071 ($206) 14205) 11203 02021 ($200) 1193) a $70.0 $231 4232 $234 $235 1237 UR $240 190.0 (MN $70.0 ($1871 ($196) ($186) 1190 $IN) 11193 14183 01921 ($1821 ($191) ($181) 11193 11175) En $80.0 $242 $244 1245 $247 $248 $250 1252 180.0 141771 ($176) ($175) 15174 01721 ($170 i9370) $10.0 $203 $262 420 $S55 5258 $216 $270 NIS ($1631 (6ICO ISIMO l$153 ‘5158I also Ism FY 16E ERITDA (S Million) FY 16E FCF iS Million) tOOLY. Ga:',Smael f 'Pt Tel 11.7$ $2.24 µ75 1125 UR 1435 $1.75 4225 $275 1125 $3.7$ $535 41.75 Oa 4159 $10) WS $163 4165 $166 $103 $300 ($1011 (39) 1$97) me (RN ($331 WI) $40.0 $176 $175 $179 $161 4152 $164 $185 140.0 OS ($57. WS) ON OKI ($501 ($n) $40.0 $194 $194 1197 SIN 1200 5201 5203 IMO ($781 175) ISM 1471) 0701 (4881 ISITG RSA 4211 1212 1214 UM 4217 5219 MA ($831 1182) 1160) MO (5571 (3881 ISSN $70.0 226 $2.9) $231 $233 5235 5236 $236 $700 ran SR) SW IBM) (441 ($431 IWO $80.0 $246 $247 $249 $250 5252 261 $256 180.0 ($391 MN ($36) ISM) (53321 MO (269 190.0 RN 1269 4271 $273 1274 $276 $277 PIO ($20) 1119) 1117) IWO 0141 11121 1111) FY ISE Nei Leverage FY 15E Debt Proved Reserves (S Motel SYSIFX C..... :soon. NYSE X Gas 11Mcle) $1.75 $2.25 275 $3.25 $3.11 $425 $4.75 41.74 $225 275 225 53.35 PIS µ75 4110 434 484 4.7. 41. 4.64 464 4.54 $300 S4 i $4.1 44.1 MI $91 MA 14.1 $400 45* 444 4.44 4.4. 414 434 424 $400 54.0 SA 0 48 0 14 0 $4.0 20,0 490 $500 424 4.24 4.14 4.1. 404 4.04 404 4504 $4.0 $4.0 $40 $4 0 $4.0 $4.0 44.0 $60.0 39x 19x 194 3.11. 3.. IR 174 $60.0 $4.0 $3.9 419 $39 119 $19 53.9 0 470.0 3.74 174 164 3.11. 344 1.54 154 170.0 $19 $3.9 419 $39 119 $19 $3.9 4050 344 14$ Ma 3.4. 344 IR 134 $500 $3.9 $39 $38 $38 118 $3.8 $3.8 $900 92x 324 334 3.1. 3.14 3 Ix 304 443.0 43.6 $3 6 435 $35 sae $3.5 413 FY 16E Net Leverage FY 16E Debi.Proved Reserves (Softie) NYSE% Gat. IS. mete) NYNEX Gas Mende) 41.75 42.23 $2.75 $3.25 $1.1$ UR 14.74 41.23 224 $226 1125 43.75 4.25 44 T. 430.0 624 61x 6.0. 0.0. 5% 564 524 193.0 44.5 45 SAS SA 5 41.5 $4.4 444 $40.0 544 5.4a 5.34 5,3. 52. 5.1* 4.14 $40.0 IAA $4.4 $4.4 $4.4 11.3 14.3 14.3 .4 4470 434 RR 4.74 4.7. 464 4.64 4.54 $500 4.3 $43 413 113 $4.2 44.2 142 $50.0 934 934 424 4.2. 42, 4.14 414 850.0 $4.2 $42 42 42 $4.1 $4.1 $4.1 $700 31* 3.04 314 3.1). 314 174 3.74 470.0 491 PI $4' 41 44.0 $4.0 $4.0 180.0 35* 154 334 3.4. 344 3.4* 3,34 $80.0 4.0 44.0 410 410 $19 $19 53.9 180.0 344 114 114 3.11. 34. 104 3,114 190.0 $3.8 $33 US $18 518 $3.8 $3.8 San Owesche font *wt., Imam LP tor the (Swag corpomes not convenv 083494 Weld the ferecaSsRpees.e.S-ct 0.bmg °omens., cgs's/tom* A PIA.AAMICAO 4AFIGEPELTSCIVANICA640.0ASPEIVARO:$2.21252,CENSK IPIAI12Wsnoni4X -0 0. 0 EFTA01097805 13 January 2015 HY Corporate Credit Energy 'Figure 132: Tullow Oil Financial Summary lan• 11•908 NaraI IC Oen NC Mao MOT IlnI Xxse 21211 112114 141..n 114014 140.03 4.2%0 643:02 0294 .a.fran IS0.17 i0.01 Ina .an xsN 9X.4 2244 Iw 480.4441.48 Or Pau Ca7,47•140.7. • 4.1.4•40 IYI u* 1.744 2244 044,0 9 te4) am YI 463 en 00 41.40.0.14.1100 c414 lull 1111104%.4314•0301 NI r ntl NI 877 IMO 3.70 110.44 281 3116 321 263 221 191 OI 14.1 Ohl vN 24 47 (014041.4443, 444 430 100 444 4 Onrin..400.44444 11111 ICS 474 435 1241 PI 011 lM Oh, 06.04040 4, °PIS Oslo IND Ina 312 IN In 47 41 *nor. 492 313 ra (alb la ITI 1410C46401.14474 I.747 IMF Lin IMI ua 44.404.4 4.4%,4144.044 , an 11 1.18 1017 t ar 205 ISIS ua wr Ann 8.4.4 060403.0 0421 In/1 nif 1104/0 IPSO 14024 I IGII I Ina 197111 • 114/44.iOss 3101, la n .1 OM I - 949 811 1921 114.01.03n4•044.01.4.140104411 0614 Gantry /nal On 444.3.40, nab 24.110 anf nag 10.042 Ina 33 741 Oaf 4130 43141 110.01,40.411•411W4 t84421 14:0 020 In ION 101 944 Ile 905 IGO ConarOl.n4.74. 300 0.002 "Al, inn u440 11,04 22 441 212141 21,0( nag 11•41.40, 7744 San Cana Ora nnae4419.14 18144 KA I nal Ra Ra /01310 IAN Inn 104 WIN 0414 irfin 11•24494171. 14. 404 its Ma Pa Inat6...”440.40.40.34en IA010 tun 9050 1001 KIM Ina Nan 14144 10311 St la1 1230 81.91 .4210 12111 1)20 MOM 94.212 27 444 44.1444.104. 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Ann.. as Pawn* (Ala Mn 'in :ma Ar••••••1 711n PannanneinIall Mn an I 0, 3, %V•••.1.10 1115. 214 /a t.4., ?on...oaf:tit NY. 144.10.14 NI* 63* 1343 ,17,73 k% V.cal P•• :OA I a nt • • L•11 0.184. Yaw 477,0104 1.4 0.114140.131 14013.01214147n Saint De.rtni‘.Ma CtI.N.4447 1841 Page 152 Deutsche Bank Securities Inc. EFTA01097806 Figure 133: Commodity Price Scenario Analysis: Tullow Oil Sensitivity Based on Bloomberg Consensus Deutsche Bank Securities Inc FY 15E E81TOA Million/ PY 15E ECU' S 6UVNa!umlGnv 'eerce !Perm NBP &Bigot Gr. .nercc (Icuri 115.00 $2300 $35.00 105.00 356.03 YØ $7369 115.0) $25.00 135.00 $46.06 18520 $65.00 575.08 5828 190 19% $1602 51667 $1.102 $1.137 $35D ($1790i t$883) 1193% 9908 GUS ($856) 845.0 $1.009 $1.043 $1.078 $1.113 $1.147 $1.182 $1.217 $45.0 (1.9361 (1903) 11%21 6255 (18291 (1802) (1775) 7.55.0 11.049 S1.124 $1.158 $1.193 $1226 11.262 61.297 5090 (18821 ($851) 07751 %Ne 11721) K40 3/.169 $1.201 a sen $1.308 $1.343 $1.376 $61.0 ($6281 ($801) 1/774) 748 (3)211 (1898) 11861 $75.0 31.250 11.284 11319 sus 51.388 $1.423 K454 575.0 (17741 ($747) 4720) 96994 06471 Sie 11414) S85.0 $1.330 $1.366 $1.399 $1434 $1.499 $1.503 $1.538 $85.0 (37201 4693) 13616) 5640 06131 (1686) 71960) 144.0 $1.410 $1.445 $1.480 $1 114 $1549 $1.584 $1.619 $9$ .1466, 1143% 156131 5596 ($5691 ($532) 1$506) FY 16E EFITOA 1S Million/ FY 16E FCF (5 Million HOP Na Cs pence ihnon I:BP Unturcl Clax Iherrn Si 5 CO 1200 $ SK.00 356.00 165.00 17010 515.03 52500 115.00 $46.00 16500 M5Ø 113091 :no 5.43) 552E 1603 $641 1623 $716 3330 5333, .5365, 4332 02611 ($253) wu, 58(7 P25 5740 577(1 $43.0 ($8911 Qu) nus IØ71 41791 19151) 555.0 5764 190 113.0 sen 5915 $.909 199) $55.0 ($119! (5188 S1Å) '$1061 9071 (091 165.0 1001 1933 1977 $1014 $1052 51.030 51.127 595.0 (1861 1159) 1131) ($3) $25 $53 $730 $1.038 13076 $1.113 $1 151 11193 51.226 51,:+51 $74.0 $16 144 $72 359 $127 $155 $430 $1.175 $1.213 11%0 sl an 5132C 51.312 $1130 $118 1146 5174 5202 1230 $257 195.0 31.312 $1.350 SI 95: SI 425 51 4( 5559) 195.0 $220 1248 sere 5301 5332 $30 FY 15E Net Leverage F Y 15E Debt PiOved treserven (S Sicle) HOP Naha« Ca (pence Pierm) I:BP Benn.' Cas (penc. ihnrm) $1500 25C0 100 10 03 115.03 M5ø 3 C0 $15.0 $210 511.00 .00 1100 $71.00 $35.0 49x 4:. 4 5, 43. 42( 40. 39. 535.0 $2.0 520 520 120 $2.0 $1.9 $1.9 $45.0 49X 49a 43. 40. 35:( ah 36a 1450 $2.0 $2.0 $20 519 $1.9 11.9 SIS 584.0 4.1x Witt 3.8* 3.74 30 3.4.. 3.3n OMO $1.9 $1.9 $19 SIS $1.9 11.9 91.9 ==l1 1040 3.8x J65 335 3.4. 3.3. 329 3.17 $1.9 11.9 119 $1.1 $/.9 11.9 SIS 175.0 35x 34n 230 12. 3.1x 347 2% $75.0 61.9 11.9 519 SIS $1.9 SIS SIS 585.0 32x 205 2% 28/. 275 SBSO 61.9 SIS 519 SIS $1.8 $IS SIS 5910 305 29x 28* 2.7n 2.7), 20 2.55 5840 61.9 SIS $1.8 SIS $18 $38 SIS FY 16E Nel leverage F Y 16E Debt PiOved Ptserves (SINIcrel HOP Neutal Gon (pCnC-0 1n*:(111 HOP Halles) Gan (pence Inerm) s15ø 25.40 $33.00 $36.50 $6500 7300 15.09 $2500 $33.00 1.15.00 $50/0 $6140 $7300 550 993 91. 8.4. 7.9, 2. 7). 93. 5320 $2 I 121 520 52.0 43.0 120 145.0 78* 707 6.1. 549 51n SKO $2.1 120 $20 $20 52.0 $1.9 $1.9 $55.0 801 5.119 5-35 4.7x 43x 405 165.0 $2.0 $2.0 $IS SIS $1.9 $1.9 SIS 491: 4.15 4.42 4.04 18/. 285 $64.0 11.9 11.9 $13 SIS $1.8 SIS $430 $750 41x 3%. 277 3.6n 3.« 339 3.17 $71.0 11.9 114 $1.8 0 518 il.? 117 $85.0 345 82. 3.1. 269 28x 2 $85.0 11.8 .15 $1.8 51) 31.7 il.? il.? $95.0 30x 296 287 2.7. 24. 25x 245 /350 11.7 11.7 21.7 512 $1.6 11.9 636 Saxo>. °reine. 8zek Martin Miece 20 98•700.70970 ors0n7/ 8e1s778•90 Oy 0814W) Set) me krocassiespeeneher etantwg contenu., <ventres o., ), A PER.AA8W.CA12fAi/OLPEL7510446.046.0.0ASPEWAR00.0.98%6A1$11101,1172%.991WPX EFTA01097807 13 January 2015 HY Corporate Credit Energy 'Figure 134: WPX Energy Financial Summary MOM 4444I nolway NC Sate IC MIS 5.204 9./444441114144 ismannotbas, 15..1217 X61.4 MIA 600% 9. 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F.70 16 624%0' ‘700,forntin I 401 440 Prime Lit Ivan. 19 14 90 IS CO% re 1.lorwa Nts 22 1.140 as: 425%0, uwanyesan to, SCO Prime 14.04:ernfliOrBeio 59415 101% NMI 0878 Mal Debt 202 2407 roc. INl ell 1,747 2254 4,353 NeiDM 1.343 111140141•4•4•1•004.3 640 WO Tam Cakay 2400 2810 Diterprim A446 321 3-014t 40 % 17.1141 201 IA. 2015E 46% 402777 CD11 CV solo 1, 4 031131. /V5 .1 I n ', min., O re iv $144/awita N MM. cf 202724217.rntant+to.lewema14 5 #4V.v0. WedMAT OW. atVg00”, Pe4N$W"illn4.4MWM*SIMOGK401'll s61640 Ddleithe &Mk Compine Page 154 Deutsche Bank Securities Inc. EFTA01097808 Figure 135: Commodity Price Scenario Analysis:WPX Energy Sensitivity Based on Bloomberg Consensus Deutsche Bank Securities Inc FY 15E EGITOA (S Slillionl ry ISE FCF IS IdbIlLorb V\IL%Ga: . 7 C I $1.75 WS 1275 $3.25 $3.75 $435 $4.75 11.79 4225 MU $3.25 13.75 WU $4.75 $30.0 5545 5614 1661 $713 $763 tall $584 $30.0 4328 4081 -4754 4738 4187 4641 $40.0 3629 $678 $735 5777 1827 $881 $028 $40.0 .1367 $819 -$772 $724 4676 4425 4579 3693 $743 $792 $841 1891 $945 $092 $50.0 .1305 $758 .1710 4615 4663 4518 $50.0 $60.0 $757 $007 UM 0/06 5365 $1.009 $1.056 $66.0 4743 $596 4001 4653 '$502 4456 570.0 $522 an UM $970 51 019 $1.073 51.121 $70.0 4482 -9134 3583 .$138 4492 440 4394 $80.0 9386 $835 $9116 $1024 $1364 $1.119 $1.185 $90.0 MO 1573 .$477 4430 4379 $333 5950 $099 41.019 $1094 51.148 $1.232 $1.249 593.0 5659 $511 4416 -$34.9 4317 4271 NM FY 16E EBITDA (S Million) FY 16E FCF (5 Million) NW EX Gas IS racial ullidE X Gas 'Sande) $1,25 $2.2$ $ $1.23 3.25 $4.21 $476 51.75 522$ $2 53.25 13.75 1.25 $4 73 $300 498 $41 $140 5240 $039 £.436 sao0 41.999 .91.4OX .$1.3b1 .5126$ .$1199 41.105 $1.016 540.0 Si $10) $19) $249 5380 $4 97 $596 MO 41A11 41.321 41.232 41.142 41053 4363 4074 $50.0 9159 3233 5358 5457 $566 $655 $755 $50.0 41288 41.179 41.089 .11.000 4911 .1820 4731 3317 3417 $516 $615 1714 $814 $913 $80.0 41.126 41.037 .5$47 4764 4678 4589 a $800 O $704) $474 $979 9/74 $714 9573 5372 51.071 $70.0 4364 4094 4713 4626 4536 -4447 $90.0 9114 5733 MG $132 51401 2/.130 si.us $90.0 4641 4752 t66x 4573 $454 4383 -5304 !WO 3792 3891 4931 41 010 $1189 $4.288 $1.396 $90.0 -U.99 $431 4341 '$251 4162 FY 445E Nel Leverage FY 15E Dabs Nosed Reserves (5 1/610) GYM EX Gas IS'male) NY.% X Gas tstnaio $4 51.75 $2.28 5271 33,25 43.74 4424 $1.75 $223 $ $325 43.75 $4 21 $30.0 92x 29* 214 2.4* 2.1x 594 1 ex $30.0 SOX $04 104 4/..4 50.3 503 $03 $40.0 224 254 234 2.1x I.S. 1.7X 1.8x $40.0 50.4 $04 $04 $03 503 10.3 $03 $500 2Ax 224 204 I.B. 1.74 1.9x SU $50.0 S0.4 $04 $03 $03 503 $0.3 $03 $03.0 126 20x /Ix 1.19 IS 163 1.34 $400 $03 $03 523 523 $0.3 $0.3 $03 $70.0 1.96 tax tex 'Si. 1.44 It 1.14 $70.0 $03 $03 523 523 50.3 $0.3 $03 6800 1.7x La 1.44 IS. 13 Mx la 1810 50.3 $03 $03 503 103 30.3 503 $96.0 10x 1304 1.34 1.2. 1.1x 1.94 0.96 M O 50 3 $0 3 503 $03 503 1.0.3 $03 EY 181 Debt Proved e NYVILX bras $1.71 3235 $275 S/25 517$ $420 $4.70 51.7$ $224 $875 $3.25 53.71 SUS 5.25 5::30 -11.66 78.16 213* 606 6.93 $.19.0 $0.7 $0.7 507 506 $0.8 $0.6 003 I 640.0 $50.0 sae 3.0110 1871 BOX 546 30.6x 11.1x 6.41 4.31 '4.7. 7.6x 4.94 141 0.34 5.74 2.8. 684 44* 3.14 23. 5.06 15* 236 206 4.03 294 224 1ex MO $50.0 $600 $70.0 $0.7 $0.6 $0.6 $0.5 $0.6 10.6 10.6 $0.5 506 $06 $05 SOS 506 $05 $05 505 50.6 105 105 504 56.5 $0.5 $0.4 5630 los $0.5 $0.4 10.4 $70.0 $80.0 346 223 233 1.16 IS. 1.57 131 1810 $0.5 $0.5 504 504 $0.4 00.4 0413 e90.0 2.7x 224 IS. 123 111% 5910 $0.5 50.4 $04 $04 20.3 $0.3 $03 taro:. Davao* £7•At abornberg 'awe CP tonne l'onovong comonns nig cowed 04(49147.41nett 9v forecnstweenvem thbombogeo744m7tu 444moms e4,1,. A PER.Aft8a4CX0rANGEPUTSG14.44#1.4170.0ASPL/11/4/70SES/4.51WEN.$1147Pat72W470 WPX -0 03 EFTA01097809 13 January 2015 Hy Corporate Credit Energy The primary author of this report, Kathryn O'Connor, wishes to acknowledge the contributions made by Sai Ravindran and Somaiah Valliyappan , employees of Irevna, a division of CRISIL Limited, a third-party provider of offshore research support services to Deutsche Bank. Page 156 Deutsche Bank Securities Inc. EFTA01097810 13 January 2015 HY Corporate Credit Energy Appendix 1 Important Disclosures Additional information available upon request For disclosures pertaining to recommendations or estimates made on a security mentioned in this report, please see the most recently published company report or visit our global disclosure look-up page on our website at htto://gm.db.com/ger/disclosure/DisclosureDirectomeasr Analyst Certification The views expressed in this report accurately reflect the personal views of the undersigned lead analyst about the subject issuers and the securities of those issuers. In addition, the undersigned lead analyst has not and will not receive any compensation for providing a specific recommendation or view in this report. Kathryn O'Connor/Jared Weil 'Deutsche Bank debt rating key Buy: These bonds are expected to outperform other issues in the sector/industry group over the next three to six-month period. Hold: These bonds are fairly valued currently. If owned, no need to sell, but we await events/ releases/ conditions that would make the bond attractive enough for us to upgrade. In the interim, the bond will likely perform as well as the average issue in the sector/industry group. Sell: There exists a significant likelihood that these bonds will underperform relative to other issues in their sectodindustry group, at least over the next three months. Deutsche Bank Securities Inc. Page 157 EFTA01097811 13 January 2015 HY Corporate Credit Energy Regulatory Disclosures 1. Important Additional Conflict Disclosures Aside from within this report, important conflict disclosures can also be found at under the "Disclosures Lookup" and "Legal" tabs. Investors are strongly encouraged to review this information before investing. 2. Short-Term Trade Ideas Deutsche Bank equity research analysts sometimes have shorter-term trade ideas (known as SOLAR ideas) that are consistent or inconsistent with Deutsche Bank's existing longer term ratings. These trade ideas can be found at the SOLAR link at 3. Country-Specific Disclosures Australia and New Zealand: This research, and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act and New Zealand Financial Advisors Act respectively. Brazil: The views expressed above accurately reflect personal views of the authors about the subject company(ies) and its(their) securities, including in relation to Deutsche Bank. The compensation of the equity research analyst(s) is indirectly affected by revenues deriving from the business and financial transactions of Deutsche Bank. In cases where at least one Brazil based analyst (identified by a phone number starting with +55 country code) has taken part in the preparation of this research report, the Brazil based analyst whose name appears first assumes primary responsibility for its content from a Brazilian regulatory perspective and for its compliance with CVM Instruction # 483. 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United Arab Emirates: Deutsche Bank AG in the Dubai International Financial Centre (registered no. 00045) is regulated by the Dubai Financial Services Authority. Deutsche Bank AG - DIFC Branch may only undertake the financial services activities that fall within the scope of its existing DFSA license. Principal place of business in the DIFC: Dubai International Financial Centre, The Gate Village, Building 5, PO Box 504902, Dubai, U.A.E. This information has been distributed by Deutsche Bank AG. Related financial products or services are only available to Professional Clients, as defined by the Dubai Financial Services Authority. Page 158 Deutsche Bank Securities Inc. EFTA01097812 13 January 2015 HY Corporate Credit Energy Risks to Fixed Income Positions Macroeconomic fluctuations often account for most of the risks associated with exposures to instruments that promise to pay fixed or variable interest rates. For an investor that is long fixed rate instruments (thus receiving these cash flows), increases in interest rates naturally lift the discount factors applied to the expected cash flows and thus cause a loss. The longer the maturity of a certain cash flow and the higher the move in the discount factor, the higher will be the loss. Upside surprises in inflation, fiscal funding needs, and FX depreciation rates are among the most common adverse macroeconomic shocks to receivers. But counterparty exposure, issuer creditworthiness, client segmentation, regulation (including changes in assets holding limits for different types of investors), changes in tax policies, currency convertibility (which may constrain currency conversion, repatriation of profits and/or the liquidation of positions), and settlement issues related to local clearing houses are also important risk factors to be considered. The sensitivity of fixed income instruments to macroeconomic shocks may be mitigated by indexing the contracted cash flows to inflation, to FX depreciation, or to specified interest rates - these are common in emerging markets. It is important to note that the index fixings may — by construction — lag or mis•measure the actual move in the underlying variables they are intended to track. The choice of the proper fixing (or metric) is particularly important in swaps markets, where floating coupon rates (i.e., coupons indexed to a typically short-dated interest rate reference index) are exchanged for fixed coupons. It is also important to acknowledge that funding in a currency that differs from the currency in which the coupons to be received are denominated carries FX risk. Naturally, options on swaps (swaptions) also bear the risks typical to options in addition to the risks related to rates movements. Deutsche Bank Securities Inc. Page 159 EFTA01097813 David Folkerts-Landau Group Chief Economist Member of the Group Executive Committee Raj Hindocha Marcel Cassard Richard Smith and Steve Pollard Global Chief Operating Officer Global Head Co-Global Heads Research FICC Research & Global Macro Economics Equity Research Michael Spencer Ralf Hoffmann Andreas Neubauer Stove Pollard Regional Head Regional Head Regional Head Regional Head Asia Pacific Research Deutsche Bank Research, Germany Equity Research, Germany Americas Research International Locations Deutsche Bank AG Deutsche Bank AG Deutsche Bank AG Deutsche Securities Inc. Deutsche Bank Place GroBe GallusstraBe 10.14 Filial° Hongkong 2-11-1 Nagatacho Level 16 60272 Frankfurt am Main International Commerce Centre. Sanno Park Tower Corner of Hunter & Phillip Streets Germany 1 Austin Road West.Kowloon, Chiyoda-ku. Tokyo 100.6171 Sydney. NSW 2000 Tel: 149) 69 910 00 Hong Kong Japan Australia Tel: (852)2203 8888 Tel: (8113 5156 6770 Tel: 161) 2 8258 1234 Deutsche Bank AD London Deutsche Bank Securities Inc 1 Great Winchester Street 60 Wall Street London EC2N 2E0 New York. NY 10005 United Kingdom United States of America Tel 144) 20 7545 8000 Tel: 111 212 250 2500 Global Disclaimer the inlonnation and Marro n tho report ware praparidtra Dentser Bath AG or ono •t its Orator reacienne 'Darer bank}. TN inkirinathin Man is throe to %a Fillet% and ono bean Obtained nom pubic amireco belimedio Ca Mara Gauger Bath loathe nOthartheritthon as to to accuracy or cOmplatancos of oath elimination. Cease% Bank may ammo in sthuntrs loam aches, on a peopeotaig bats of Othanaak in a mono' nConsisigit With the Om Wean in the emeatth %pea F addetion othars wilhn Donser Sank. including simian's% and oaks staff. may labs a uthollial is into/gator Mt thal tram in this °marchtoms Onions. 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